Author Archives: Matt Stoller

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him at jttp://www.twitter.com/matthewstoller

I was listening to Bloomberg surveillance this morning and they were discussing the problem of skyrocketing rents mixed with tight credit for mortgages and increasing foreclosures.  One of the hosts said that “everyone was waiting for the 49 state mortgage settlement” as a go signal to start foreclosures again.  That’s what the mortgage settlement really is, a cultural, legal, and political signal of “all clear”.  How exactly a new wave of foreclosures is supposed to help the housing market is still something of a puzzle, but it does show that the administration and most settlement pushers really do believe that the market needs to clear via foreclosures before it can reset.  I guess we’ll see.

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

Here’s the President on Sunday on a new trade deal with Colombia.

Obama says US trade deal with Colombia has strong protections for workers and the environment….

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Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

Today, both JP Morgan Chase and Wells Fargo released their earnings, beating expectations on revenue and profit.  Nonetheless, their stock prices fell throughout the day.  I went through their earnings releases to see what kinds of interesting information they’ve put out relating to mortgages.  Here’s the JP Morgan Chase release, and here’s the Wells release.  Deposits are up at both banks (Move Your Money campaign notwithstanding), and new regulatory guidance on second liens seems to be having a very modest effect at both banks.

By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

Sorry for the lateness of this post, one of those days I’m afraid.

Italian borrowing costs were seen rising overnight as the country moved into a second day of auctions of  bonds and bills.

Of note €2.884 billion in three-year debt at a yield of 3.89% were sold. The last auction of few weeks ago came in at 2.76% so there has been a 1.1% jump in under a month. The bid to cover was also down to 1.44 from 1.56. On Wednesday Italy’s one-year borrowing costs doubled.  Treasury raised €4.88 billion which was under the full allocation of €5 billion.

Although these number are way down from the heady heights of late November yields, across the Italian curve yields have been rising since the end of March. The Italian authorities, ignoring yesterday’s message from the Spanish, blamed contagion for the higher yields.

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

If you picked up a newspaper in DC this week, it would have been hard to avoid noticing that a bizarre and irrelevant spat is consuming much of the insider political media and top political officials.  Earlier this week, a corporate lobbyist named Hilary Rosen tweeted a vague insult at GOP Presidential nominee wife Ann Romney.  Rosen said that Romney had never worked a day in her life, and so could not credibly speak to the economic concerns of women.  The Republicans demanded an apology.  Rosen refused.  Obama advisors like David Axelrod and Jim Messina then weighed in on Romney’s side.  Eventually, Rosen caved to the pressure and apologized.  This is why.

Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives.

“Pink slime” just had its fifteen minutes of fame.  BPI, the producer of pink slime, calls it “Lean Finely Textured Beef.”  BPI’s slogan is “expect a higher standard.” Pink slime starts with fatty tissues that are inherently more likely to be repositories of salmonella and e coli infections.  The tissues are shredded and rendered and most of the fat drained off.  The pink slime, however, is still more likely to be infected after this processing and that makes it dangerous and can make it smell spoiled.  BPI’s “innovation” was to gas the pink slime in Mr. Clean (ammonia) to try to kill bacteria and reduce the stink.  The resultant pink slime is then frozen into bricks and shipped in bulk.

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

Last month, Yves highlighted an article on the coming fight between senior Democrat Maxine Waters and senior Democrat Carolyn Maloney over the top spot on the Financial Services Committee now that the bank-friendly Barney Frank is retiring.  Maloney, of course, is the driving force behind several initiatives to deregulate Wall Street, including the JOBS Act (which Alexis Goldstein took down in Maloney’s face on Up with Chris Hayes) and a bill to get rid of a significant derivatives regulation by redefining a transparent public swaps exchange as two guys talking on the phone.  Maloney as ranking member of the Financial Services Committee would be a victory for the New Democrat caucus and its banking allies.  Waters, of course, carries her own baggage.  She is under an ethics cloud, which had dragged on for years inconclusively (but I suspect will wrap up without consequences).  She is widely hated by the financial services community, and she supported problematic policies around Fannie and Freddie in the 1990s and early 2000s.

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

Over the past three years, the big four servicers have been keeping hundreds of billions of dollars of second mortgages on their books (mostly in the form of Home Equity Lines of Credit, or HELOCs).  Many of these mortgages would seem effectively worthless, because a home equity line of credit or second mortgage on top of an already deeply underwater first mortgage has no value.  You can’t use it to foreclose, because you’d get nothing out of the foreclosure – all of that would go to the first mortgage holder (usually some investor in a pension fund somewhere).  It has only “hostage value”, or the ability to stop a modification or write-down from happening.  The best way to clean up this situation is to have the regulators (FDIC, OCC, Federal Reserve) simply tell the banks that they must write down their second mortgages on collateral that has been impaired.  That way, the incentive problem goes away.  By forcing the bank to recognize the loss now, the bank will no longer stop a modification on a first mortgage.  And in fact, the regulators pretty much agreed that this is what their examiners should do, when they issued new rules earlier this year on accounting for second liens.

As the next INET conference begins in Germany, George Soros has a piece out discussing the Eurozone crisis.  He points out that the Eurozone has been quietly restructuring its financial arrangements along national lines, ending an era of co-mingled assets and liabilities across national borders.  This is something I hadn’t realized, but it presents, as he shows, other dangers.

At the onset of the crisis, the eurozone’s breakup was inconceivable: the assets and liabilities denominated in the common currency were so intermingled that a breakup would cause an uncontrollable meltdown. But, as the crisis has progressed, the eurozone financial system has been progressively reoriented along national lines.

This trend has gathered momentum in recent months. The LTRO enabled Spanish and Italian banks to engage in very profitable and low-risk arbitrage in their own countries’ bonds. And the preferential treatment received by the ECB on its Greek bonds will discourage other investors from holding sovereign debt. If this continues for a few more years, a eurozone breakup would become possible without a meltdown – the omelet could be unscrambled – but it would leave the creditor countries’ central banks holding large, difficult-to-enforce claims against the debtor countries’ central banks.

By Delusional Economics, who is horrified at the state of economic commentary in Australia and is determined to cleanse the daily flow of vested interests propaganda to produce a balanced counterpoint. Cross posted from MacroBusiness.

There seems to be a pattern emerging as stressed Eurozone nations struggle against the austerity based policy that slowly strangles them. The first stage is a denial that anything is wrong, the second is that there is some problems but with renewed vigour the issues will be solved and the third stage is when reality finally begins to sink in that the country is in serious trouble and some form of external “help” is inevitable.

“I’m flabbergasted. I’m embarrassed. This is the biggest screw-up electorally that I’ve ever been involved in,” said one progressive activist still sorting through the wreckage.

“Why Ilya Sheyman And Progressives Lost Big In Illinois’ 10th District Primary”, Huffington Post

Delaney defeated state Sen. Rob Garagiola, 54 percent to 29 percent, in the Democratic primary. The result is notable since most people believe Democrats in Annapolis drew the district with Garagiola in mind and the legislator enjoyed support from organized labor, progressive groups, and Gov. Martin O’Malley (D).”

Rothenberg Political Report

At this point, even Moveon members won’t vote for self-proclaimed progressive candidates.  And labor and DC liberals can’t deliver votes, but money can.  Those are the lessons that insiders are drawing from two important but little noted Congressional primaries that happened late last month, one in Illinois and one in Maryland.

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller

Yesterday, the President gave a speech in which he demanded that Congress raise taxes on millionaires, as a way to somewhat recalibrate the nation’s wealth distribution.  His advisors, like Gene Sperling, are giving speeches talking about the need for manufacturing.  A common question in DC is whether this populist pose will help him win the election.  Perhaps it will.  Perhaps not.  Romney is a weak candidate, cartoonishly wealthy and from what I’ve seen, pretty inept.  But on policy, there’s a more interesting question.

By Thomas Ferguson, Professor of Political Science at the University of Massachusetts, Boston. He is the author of many books and articles, including Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems. Cross posted from Alternet

“No one can serve two masters. Either you will hate the one andlove the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.” — Matthew 6:24 (NIV)

As Rick Santorum exits and Newt Gingrich fades out, who would have imagined that the Gospel of St. Matthew would provide the best handle on the GOP primaries this year?