Sunday, Nov 02nd
Last update08:06:05 AM GMT
Economic Glance
So many Americans have been jobless for so long that the government is changing how it records long-term unemployment. Citing what it calls "an unprecedented rise" in long-term unemployment, the federal Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five years the upper limit on how long someone can be listed as having been jobless.
The move could help economists better measure the severity of the nation's prolonged economic downturn.
American International Group Inc., the insurer bailed out by the U.S., garnered $4.3 billion in bank credit lines in another step toward repaying taxpayers and gaining independence. The credit, provided by more than 30 banks and administered by JPMorgan Chase & Co., includes two $1.5 billion facilities, one for three years and the other for 364 days, AIG said today in a regulatory filing.
AIG’s property-casualty division Chartis Inc. got $1.3 billion, the insurer said. The firm rose $2.01, or 3.7 percent, to $56.34 at 10:03 a.m. New York Stock Exchange composite trading.
Billions of dollars in top-rated bonds backed by community banks have gone bust, debunking the defense offered by credit-rating agencies that wildly inaccurate ratings were limited to risky mortgage bonds that imploded and then triggered the U.S. financial crisis.
Government regulators and lawyers across the country are examining how credit-rating agencies came to bless as "investment grade" the now-toxic bonds made up of special securities issued by community bank holding companies.
The Federal Reserve Board, chastised for regulatory inaction that contributed to the subprime mortgage meltdown, also missed a chance to prevent much of the financial chaos ravaging hundreds of small- and mid-sized banks.
In early 2005, at a time when the housing market was overheated and economic danger signs were in the air, the Fed had an opportunity to put a damper on risk taking among banks, especially those that had long been bedrocks of smaller cities and towns across the nation.
The banks involved include Bank of America, Ally (formerly GMAC), JP Morgan Chase, One WestBank (formerly Indybank), Citibank, and Wells Fargo.
Together, they filed 29,000 foreclosure notices so far this year, nearly half of the 65,000 to date.
In addition, the Court is demanding that two dozen smaller lenders prove that they are on the up and up with all of their foreclosure actiions, and must provide proof to a Special Master that they did not use any shortcuts in moving people out of their homes.
When Hal Scott testified on financial reform before the Senate last February, he identified himself simply as a Harvard Law School professor and director of an independent research group.
He also had some other relevant experience: Scott is on the board of Lazard, a prominent Wall Street firm with no small interest in the outcome of regulatory reform. He did not bother to mention this association during his testimony.
The problem is that the broad decline of the manufacturing sector that has been underway in this country for decades now may threaten not just the long-term health of the economy but also the living standards of all but the wealthiest Americans.
"The whole country is now seeing the story that Michigan has been living with for a long time," said Diane Swonk, chief economist at Mesirow Financial. "We have kicked the can so far down the road that now all we have is a cliff to fall off."
Page 33 of 69
