Tax cuts for the rich, or better teachers in schools? – It was depressing enough when the president caved on extending $120 billion in tax cuts for the highest-earning 2 percent of Americans at a time of war and surging debt. As proof of White House fear and timidity, and Republican greed and myopia, the news doesn’t get much worse. That’s $120 billion over two years that won’t go to boost job creation. Nor will it fund a portion of the $300 billion we’ll spend on wars during same period – instead, we’ll borrow that abroad and hand the bill to the kids. Worse, none of that cash will be available to lure America’s top young talent to the classroom by finally making teaching a prestigious, well-paying career. Oops – I forgot – no one in the tax and budget talks was talking about transforming the teaching profession as part of America’s long-term economic recovery plan. After all, that would mean thinking beyond 2012. Yet the education world was rocked Tuesday when students in Shanghai, in that city’s debut on a respected international test, outscored dozens of other countries in math, science and reading. Shanghai was No. 1 in all three subjects; the United States was 17th, 23rd and 31st.
Using Google Maps to Find Foreclosures – You can add foreclosures to the list of searches that Google excels at executing. Barry Ritholtz of The Big Picture blog explores the amazing functionality provided through Google Maps, which he says has been around for a while but has improved recently. It’s both incredible and awful to see just how foreclosure continues to plague the U.S. Here’s how it works, from Chart Porn, via Ritholtz:
Google Maps Foreclosure Listings
1. Punch in any US address into Google Maps.
2. Your options are Earth, Satellite, Map, Traffic and . . . More. (Select "More")
3. The drop down menu gives you a check box option for "Real Estate."
4. The left column will give you several options (You may have to select "Show Options")
5. Check the box marked "Foreclosure."
Wall Street Sees New Profits In Homeowner Distress – Barely more than a year after a taxpayer bailout of major financial institutions, Bank of America and the hedge fund, Fortress Investment Group, spotted a fresh money-making opportunity – collecting the tax debts of tens of thousands of people like Walker. The bank and hedge fund can add interest charges and fees, and they bundled the debts as securities for investors. In late May and early June, proxies for the two institutions quietly bought hundreds of millions of dollars in homeowners’ property tax debts in Florida by bidding at a series of online auctions held by county tax collectors. They didn’t use their names but donned multiple other identities, dominating the auctions and repeatedly bidding on the same parcels – in the case of Walker’s small home, more than 8,000 times. Then, in September, Bank of America’s securities division packaged $301 million worth of the tax liens it and Fortress had acquired into bonds pitched privately to major investors. The anticipated return – estimated at between 7 to 10 percent – is possible because buyers of tax debts can assess a panoply of interest charges and other fees. When the debt goes unpaid long enough, the liens buyer can seize properties through foreclosure.
Futures Trading Panel Weighing Swap Exemptions – The Commodity Futures Trading Commission proposed a plan on Thursday to excuse wide swaths of non-financial companies from new rules governing the $600 trillion over-the-counter derivatives market. As part of the proposal, the trading commission is also considering whether to exempt thousands of small financial institutions such as community banks, thrifts and credit unions. Thursday’s vote means only that the plan is up for public comment. The C.F.T.C. will finalize the rules before July 2011. Under the Dodd-Frank financial overhaul law, the C.F.T.C. and the Securities and Exchange Commission, for the first time, have broad authority to regulate swaps, crucial financial instruments used in the shadowy derivatives world. The law requires big banks and other financial institutions to submit swaps to regulated clearinghouses, which serve as a backstop in case one party defaults.
What the tax extension means for me – interactive graphic – President Obama campaigned on a promise to repeal the George W. Bush-era tax cuts that benefit the wealthiest 2 percent of U.S. households. But with Republicans insistent on preserving all of the cuts, the president decided that abandoning that position was the price of preventing a political stalemate that would have caused taxes to rise for all Americans. If Congress approves the compromise deal Obama reached with GOP leaders, most Americans will pay lower taxes next year than they would have if all Bush tax cuts were extended.
Anatomy of Mortgage Fraud: MERS’s Smoking Gun, Part I – In two recent pieces I harped on the problems at MERS, the Mortgage Electronic Registration System. ("Support Representative Kaptur’s Bill: Time To Shut Down Mers And To Restore The Rule Of Law" and "Shut Down MERS"). Briefly, MERS purportedly offers an alternative to paperwork, maintaining an electronic record of mortgages that are usually packaged into mortgage backed securities (MBSs). When mortgages go delinquent, MERS helps mortgage servicers foreclose on homes. I argued that MERS was created to run multiple frauds, a topic I will discuss in more detail in part two of this series. However, one of the big puzzles of the ongoing foreclosure crisis concerns the whereabouts of the "wet ink notes" — the IOUs signed by borrowers. In foreclosure cases across the nation, the banks have been filing "lost note affidavits", certifying that they cannot find the notes that are required to prove that they have the right to take away someone’s home. In some cases, the notes miraculously appear, seemingly out of nowhere, and in others "Burger King kids" have been manufacturing them for robo-signers. By law, the notes are supposed to be at REMIC trustees, held against the MBSs sold on to investors — and must be presented to foreclose.
Barney Frank and the Fed Bailout Fallacy – Mike Stark has posted a provocative on-the-street interview with Barney Frank about the recently released Fed data. Frank offers what is now a standard defense of the Fed’s bailout operations: Without them, the economy would have collapsed, so critics should just quit whining. But Frank takes this line a step further, accusing liberal Fed critics of playing into the hands of right-wingers who don’t want to extend any economic relief to anybody for anything, ever. It’s all hooey. First, the "disappointed" critics line massages away the fact that the Fed failed to disclose an enormous amount of information. We still don’t know the credit ratings of collateral accepted at some facilities, and we don’t know the trading prices of securities they accepted as collateral at any of the facilities. Without that information, we can’t determine whether many of these actions were scandalous. Second, yes– without major government intervention, the economy would indeed have collapsed. But just because the Fed had to do something doesn’t mean it had to do exactly what it did.