Economy: Power Struggle Behind the Foreclosure Crisis
• "Though the public uproar over botched home foreclosures has focused on sloppy and often fraudulent paperwork, a much bigger battle is underway behind the scenes over how much more the banks should be helping troubled homeowners," CongressDaily (subscription) reports. "Consumer groups and state attorneys general around the country are seizing on the foreclosure mess as a way to pressure the nation's banks into making bigger and faster concessions on mortgages for millions of delinquent borrowers who want to stay in their homes."
• "Two top U.S. Federal Reserve officials gave competing views on the need for more monetary stimulus to the U.S. economy, continuing a public debate over further easing even as the core view at the U.S. central bank appears to favor such a move," Reuters reports.
A single paragraph in the Transportation Department's fiscal 2012 budget could fundamentally alter the funding mechanism for highways and other transit. The administration is calling for replacing the current highway trust fund with a "transportation trust fund" that will have separate accounts for highways, transit, high-speed rail, and a national infrastructure bank. In the near term, this means that highways would see only a slightly smaller share of the overall national transportation funds that also go to inter-city transit and passenger rail. But over a longer period of time, the move away from a dedicated highway trust fund signals the administration's desire to wean the country away from the automobile.
Transportation Secretary Ray LaHood says the idea is to streamline disparate pots of money into a larger pool that will make the agency more nimble in funding good projects. The department also has proposed consolidating 55 separate highway programs into five to give states and communities the opportunity to build on the projects they identify as priorities.
Is this a good idea? Does it make sense to think of the various components of transportation as a whole entity rather than parcel them into distinct areas? Are there dangers to what the administration is proposing? Would a streamlined government make it easier or harder for states and cities to navigate the funding process?
-- Fawn Johnson, NationalJournal.com
Home prices have plunged by about one-third since the peak of the housing bubble, according to the S&P/Case Schiller composite index of 20 major cities. Sales of new and existing homes slumped again after the expiration of the Home Buyer's tax credit. And on Monday, Corelogic reported that 22.5 percent of residential properties were underwater in the third quarter, meaning the mortgage was higher than the property's resale value. All this at a time when the Federal Reserve has pushed mortgage interest rates down to nearly all-time lows.
What is holding the market down, despite cheap money and often firesale prices? Is there anything more the government can or should do?
-- By Edmund Andrews, NationalJournal.com
How much further can the housing market sink? When will it begin to rebound?
Home prices have plunged by about one-third since the peak of the housing bubble, according to the S&P/Case Schiller composite index of 20 major cities. Sales of new and existing homes slumped again after the expiration of the homebuyer tax credit. And on Monday, CoreLogic reported that 22.5 percent of residential properties were underwater in the third quarter, meaning the mortgage was higher than the property's resale value. All this at a time when the Federal Reserve has pushed mortgage interest rates down to nearly all-time lows.
What is holding the market down, despite cheap money and often fire-sale prices? Is there anything more the government can or should do?
-- Edmund Andrews, NationalJournal.com
In the two decades before the financial crisis, there was remarkably little partisan or ideological disagreement among economists about how the Federal Reserve should conduct monetary policy. Liberals and conservatives both wanted to keep inflation below about 2 percent and unemployment below about 5 percent. Disagreements were over nuance and timing, not about overall direction. But this week, economists with Republican ties are running newspaper ads warning that the Fed's decision to pump an extra $600 billion into the economy - "quantitative easing" - will debase the dollar and spur inflation. Economists with Democratic leanings say the real danger is the opposite: deflation and double-digit unemployment.
Is there a deepening partisan or ideological split among economists about monetary policy? And if so, what does that say about the state of economics? Do sophisticated models and data analysis take a back seat to political opinion?
-- Edmund Andrews, NationalJournal.com
3 responses: James K. Galbraith, Ted Truman, Jeffrey Frankel
When President Obama meets with leaders from other Group of 20 nations this week, what is he most likely to accomplish in terms of persuading countries to adopt more "balanced'' growth strategies? The United States has been imploring countries that rely on exports for growth and have huge trade surpluses, especially China, to work harder at spurring domestic consumption. But now Asian countries are complaining that the United States is intentionally devaluing its currency through the Federal Reserve's new "quantitative easing" program. Has the Fed made the president's case harder to sell?
-- Edmund Andrews, NationalJournal.com
Will the prospect of greater political gridlock in Washington, especially on deficit reduction, become a tangible source of fear in financial markets? If Republicans block any tax increases and neither side wants to touch entitlement spending for anybody older that 55, what are the chances Congress can come up with a credible plan for bring down deficits over the next five to ten years?
3 responses: Robert Bixby, James K. Galbraith, Grover Norquist
Did Group of 20 ministers make any progress toward agreement on currency and "balanced growth" issues at their weekend meeting in South Korea? Based on what happened, what do you think the prospects are for the G-20 summit next month?
-- Ed Andrews, NationalJournal.com
All this past month, the foreclosure fraud scandal has been spreading, and toward the end of this week, markets began taking notice -- punishing stocks of banks exposed to documentation fraud. But what are the real implications of this morass? In a year, will we look back on this as a mere blip or as something far more weighty -- and why?
-- Clifford Marks, NationalJournal.com
Last week's jobs report from the Labor Department brought more bleak news: weak private-sector job growth, an unemployment rate steady at 9.6 percent and a net national jobs loss, due largely to layoffs in state and local governments. As you look closer at the Labor Department report, do you see any cause for optimism? If there's a silver lining for this economy, where is it?
-- Jim Tankersley, NationalJournal.com
5 responses: Jeffrey Frankel, Gary Burtless, James Sherk, Charles Calomiris, Grover Norquist
Remarks last week from New York Fed President William C. Dudley and Chicago Fed President Charles Evans suggested that the Fed is leaning toward another round of quantitative easing. The next Federal Open Market Committee meeting isn't until early November, but let's say it was held today -- and you got to take part. What course of action would you advocate and what factors would you cite to try to convince an increasingly divided committee?
-- Clifford Marks, NationalJournal.com
5 responses: James K. Galbraith, Isabel Sawhill, Allan Meltzer, Jeffrey Frankel, Charles Calomiris
Advertisement
Advertisement
Advertisement
TRANSPORTATION
TECHDAILYDOSE
Advertisement
