Policy Updates: July 25-29

The Numbers:

The Misery Index = 12.8%, which is a relatively unscientific look at how American’s are faring is at its highest level in 28 years.

Deportations for 2010 = 393,000 reported at the end of the fiscal year (Sept 2010) are at their highest level ever, with the Obama Administration deporting nearly 400,000 human beings.

Unemployment Rate June 2011; Overall = 9.2%; Black =16.2%; Hispanic = 11.6% The unemployment rate for African-Americans has actually worsened during the “recovery”

White unemployment dropped from 8.7 percent to 8.1 percent from June 2009 to June 2011. Hispanic unemployment dropped from 12.2 percent to 11.6 percent. And Asian unemployment dropped from 8.2 percent to 6.8 percent. All told, the overall unemployment rate fell from 9.5 percent to 9.2 percent. Politifact.com

Big Bank Quarterly Earnings:

Wells Fargo: $3.9 billion, a record; up 29% from the year-earlier period.
Bank of America: net loss of $8.8 billion (mostly write off of anticipated securitization settlement of $8.5 B)
Chase:  $5.4 Billion
Citibank:  $3.3 Billion
Goldman: $1.05 Billion - Better than last year, below industry expectations

Big Bank News:

Fed fines Wells Fargo $125 Million for steering borrowers to higher cost loans and falsifying paperwork. It’s the largest fine the Fed has ever levied which doesn’t make it good. The fine is $85M with $20M to go for compensation to borrowers.

AG settlement wrangling continues with the banks pushing hard for blanket immunity on servicing issues, document fraud, origination fraud and securities fraud before they’ll sign off on any deal. The NY and CT AG’s have openly come out pushing for a separate deal, spearheaded by them, with their wider subpoena powers and ability to get a tougher settlement.

Wall Street layoffs – worse earnings than expected for Goldman and Morgan Stanley and some of the trading outfits of the other big banks are leading to a rash of Wall Street lay-offs. They’re starting at the bottom though and firing their “junior” employees. I mean who can live on a quarterly profit of only $1.05 Billion? Seriously people, they go through that in gold plated toilet paper for the month.

HBD CFPB!

Most people get their first real bite of cake on their first birthday; the CFPB got a punch in the head.

On July 21st, the CFPB officially came into being and the same day the House passed HR 1315, which would delay/stop the transfer of authority, mess with their structure, their funding, and their ability to do the job.

Earlier in the week President Obama finally nominated a Richard Cordray to be the director of the Bureau.

Without a director, the CFPB can only do half of its job. All their authority to regulate non-bank financials like payday lenders has to wait.

Cordray, the former Ohio AG, is well respected as a fighter for consumers and communities and while he doesn’t have the charisma or star power of Elizabeth Warren, he’s considered a good choice. Which means his Senate a confirmation will be near impossible to get. 44 Senate Republicans have already said they won’t confirm ANYONE to the post until the CFPB is significantly gutted along the lines of HR 1315.

Budget Battle

Let’s talk about football instead! Still no deal? Really? Sigh.

The August 2nd deadline for raising the debt ceiling continues to loom and there is still no deal, but a lot of competing proposals and rumors. There are 3 main groups putting forward proposals:

Reid/McConnell: Basically a small deal ($1+ Trillion) with promised down the road for systemic change to the tax code and more cuts.

Gang of 6: After seeming to fall apart last month, the 6 Senators (Warner D- VA; Durbin D- IL; Conrad D- ND; Chambliss R-GA; Crapo R-ID; Coburn R-OK) are back with a sweeping deal - $3.7 Trillion – in cuts and tax code reworking that actually LOWERS the income tax rates on the rich, but closes some loopholes and makes massive cuts across the board. Reid and McConnell are pissed that they’re back, though the President has said he likes the basic framework.

Obama/Boehner: News reported yesterday that Obama and Boehner were close to a nearly $3 Trillion deal that, like the Gang of 6 would make huge cuts and promises of tax ‘reform’ down the road. Dems are not happy that they’ve 1) been left out of the talks 2) that there aren’t more (any real) revenues on the table. R’s are not happy because they see it as sneaky tax increases down the road. Since the reporting came out, both Boehner and the White House have backed away furiously.

Meanwhile the House has been busy with the crazy. This week they passed the Cut, Cap and Balance Act, which is basically an attempt to shove through a constitutional balanced budget amendment ahead of the August 2nd deadline. It makes the Ryan budget look compassionate. It has no chance in the Senate and the President has promised to veto it, but it makes good Tea Party theater.

Grover Norquist’s Get out of Jail Free Pass: Norquist the president of the Americans for Tax Reform – the guys who get all Republicans to sign their “no taxes” pledge…apparently in blood…was asked by the Washington Post if allowing the Bush Tax Cuts to sunset would violate the pledge. He said it would not, which gives Republicans some room to do nothing on this and just let them expire. Since it came out, Norquist, Boehner, Paul Ryan and everyone else has emerged from under their bridges to say that that’s not exactly what he meant, but it looks like as long as there is no vote (and no vote is necessary) this can go through.

Revenue Nugget: Changing the way Wall Street traders report their income – they get most of their money from what they make on trades and report it under capital gains, not income, would result in $400 Billion annually. Ending the mortgage interest tax deduction would result in $500 Billion.