Network News

X My Profile
View More Activity

Wonkbook: Treasury talks housing; lending loosens; death and joblessness


Feel that electricity in the air? Find your heart beating a little faster, your senses seeming a bit sharper? You're not alone. That's how everyone is feeling in the run-up to today's Treasury conference on 'The Future of Housing Finance.' The millions and millions of you following along at home can pore over the participants list here (yes, that's the Mark Zandi who is expected to attend), or stream it live at

But even as the Fed cracks down on bad lending behavior in the private market, Washington just can't figure out how to quit the mistakes its made in structuring the public scaffolding. Fannie and Freddie may be a bad foundation for our housing market, but they're still the foundation for our housing market. Along with Ginnie Mae, they backed 98 percent of mortgages this year. And this is a recession. That makes it a rough time to destabilize housing. "Nobody in the private market thinks we’re ready," Barney Frank said.

Elsewhere, some good news and some very bad news: Banks are loosening their lending, at least to larger corporations. But the economic pain continues, and there's extremely disturbing evidence of a sharp rise in suicides among the unemployed, and particularly the long-term unemployed.

It's Tuesday, and Denny's has developed the most disgusting sandwich I've ever seen. Welcome to Wonkbook.

Top Stories

The Fed has issued regulations meant to prevent mortgage-lending abuses, reports Meena Thiruvengadam: "The rules include a ban on yield-spread premiums--controversial payments that mortgage brokers have historically received in exchange for guiding consumers toward higher-interest rate mortgages. 'This will prevent loan originators from increasing their own compensation by raising the consumers' loan costs, such as by increasing the interest rate or points,' the Fed said. The ban, set to take effect April 1, will apply to both mortgage brokers and the companies employing them."

Andrew Ross Sorkin argues we must tolerate Fannie and Freddie: "Shutting down Fannie and Freddie and having the private market step in, as politically popular a sound-bite as that may be, is economically unfeasible. For better or worse, Fannie, Freddie and Ginnie Mae were behind 98 percent of all mortgages in this country so far this year, according to the Mortgage Service News. Pulling the rug out from under them would be pulling the rug from under the entire housing market as it continues to struggle. 'Nobody in the private market thinks we’re ready,' [Barney Frank] said, adding that whatever legislation is developed, it will be 'for a postrecession world.'"

Daniel Gross sees export-oriented growth as the future of the US economy:

Large banks are starting to loosen their lending standards, report Sudeep Reddy and Robin Sidel: "Large corporations have found looser terms throughout the year as banks compete for their business. But smaller companies, firms with annual sales of less than $50 million, continue to cite the difficulty in obtaining loans as an obstacle to expanding activity and creating jobs. And despite the most recent easing of terms, lending conditions remain far tighter than they were before the downturn, blocking out many small-business owners."

There are worrying signs that the depth and length of the economic crisis is increasing suicide rates among the unemployed, reports Annie Lowrey: "In rural Elkhart County, Ind., where the unemployment rate is 13.7 percent, there were nearly 40 percent more suicides in 2009 than in a normal year. In Macomb County, Mich., where the unemployment rate is also 13.7 percent, an average of 81 people per year committed suicide between 1979 and 2006. That climbed to 104 in 2008 and to more than 180 in 2009. The suicide prevention hotlines also show signs of stress. In Jan. 2007, as the recession started, there were 13,423 calls to the National Suicide Prevention Lifeline, a nationwide toll-free hotline. A year later, there were 39,467. In Aug. 2009, the call volume peaked at 57,625. Last year, the government granted the group an extra $1 million to increase programs in places with high unemployment rates."

Instrumental hip hop interlude: DJ Shadow plays "Organ Donor" live.

Still to come: Big business is pushing for the Bush tax cuts; the Obama administration is tightening the environmental standards for offshore drilling; low loan-repayment rates are putting for-profit colleges (not to mention their students) in jeopardy; and some serious jamming on the iPhonw (well, on three iPhones).


A federal judge has rejected a settlement between Citigroup and the SEC:

Big business lobbies are joining forces to push to extend the Bush tax cuts, reports James Politi: "The US Chamber of Commerce, the American Petroleum Institute - which represents the oil and gas industry - and the American Farm Bureau Federation - which lobbies for agricultural producers, held a joint press conference yesterday to argue that at least a temporary extension of tax cuts enacted under George W. Bush would help demand and spur investment...Mr Regalia of the Chamber said this would be a 'fool’s error' and accused the Obama administration of acting 'as if the upper class aren’t part of the economy'. He said the most profitable small businesses would be adversely affected by the change."

The administration and Senate Democrats are in a standoff on Chinese trade policy:

Banking regulators want to tighten overdraft rules, report Ylan Mui and Sonja Ryst: "Federal regulators are considering making the rules even tougher. Last week they proposed new restrictions on smaller banks that have been pushing into the overdraft business as big banks have scaled back. As of Sunday, banks could no longer authorize debit card purchases and ATM withdrawals if there was not enough money in the account to pay for the transaction unless customers opt in to the service. The new rules effectively put an end to the infamous $40 cup of coffee, in which a customer overdraws an account with a $3 latte and gets hit with a $37 overdraft fee."

Denmark is being forced to cut its model social welfare system:

Megan McArdle explains why the market's rate of return may never recover from the economic downturn: "Financial markets have an interesting feature that has undone many a trading strategy: once everyone starts believing something, it often stops being true. If you discover an arbitrage opportunity--otherwise known as a 'price anomaly' or 'free money'--it will be profitable only as long as few people know about it. Once it is widely known, bidders will rush into the market until the discrepancy is traded away. After that happens, future returns will be lower. In other words, once everyone believes that the stock market offers high returns for relatively little risk, that notion stops being true."

Susan Urahn argues states have to reconsider worker compensation:

Mobile cover interlude: "Irreplaceable" played on three iPhones.


The Obama administration is making environmental standards for offshore drilling stricter, reports John Broder: "The new policy will require much more extensive environmental scrutiny once the moratorium is lifted and will lengthen the process of granting new drilling permits. Under current policy, the agency has only 30 days to decide whether to approve a drilling application, and few are denied. The new policy will also suspend the issuing of automatic exemptions from environmental review for virtually all new wells in the gulf. Such waivers have become common in recent years."

The Gulf shrimp harvest is open again:

CO2 emissions fell last year due to the economic downturn, reports Vera Eckert: "IWR director Norbert Allnoch said given the force of the crisis, the reductions in CO2 output could have been greater, had stronger output in Asian and Middle Eastern countries not overcompensated the savings obtained from declines in Europe, Russia, Japan and the U.S. 'The energy-induced CO2 output in China in 2009 due to its economic growth has grown to a level now that is as high as that of the U.S. and Russia combined,' he said."

A new invention promises to make home solar power more practical:

Michael Dittmar questions the existence of a "nuclear energy renaissance": "According to the agency’s forecast, uranium demand in Europe will fall from 21,747 tons in 2010 to 17,378 tons by 2018 and roughly 16,000 tons by 2024. These numbers indicate that the EU, currently producing about 1/3 of the world’s nuclear electric energy, is heading for a reduction in nuclear-energy production of up to 20% over the coming 10 years. One can also expect that the current worldwide economic crisis will not help to accelerate the construction of nuclear power plants and new uranium mines."

Stefan Rahmstorf notes that global warming makes events like the Russian heat wave and the Pakistani flood more likely:

Robert Bryce critiques wind power: "Imagine a company proposed to construct a bridge in Minneapolis, or some other major city, that would cost, say, $250 million. The road would be designed to carry thousands of cars per day. But there's a catch: During rush hour, the thoroughfare would effectively be closed, with only 5 percent, or maybe 10 percent, of its capacity available to motorists. Were this scenario to actually occur, the public outrage would be quick and ferocious. That's exactly the issue we are facing with wind energy."

Great moments in human agility interlude: Indian rope gymnastics championships.

Domestic Policy

Low loan repayment rates at for-profit colleges are putting their access to federal student aid funds in jeopardy, reports Melissa Korn: "According to the Institute for College Access & Success, an advocacy group promoting affordable higher education, 98% of for-profit school associate's degree recipients in 2007-2008 had loans in 2008, with average debt of $19,700. At public and nonprofit colleges, 40% of associate's degree recipients had loans, with average debt of $10,900...Based on the proposed rules, schools could be stripped of access to federal funds if their students are found to have heavy debt burdens and if they don't land jobs that pay enough to handle the debt."

States are beginning to receive funds to implement premium increase regulations under health care reform, reports N.C. Aizenman: "The grants announced Monday are the first round of a $250 million, five-year program included in the new health care overhaul law intended to build states' capacity to rein in premium increases that have reached as high as 30 percent per year in some cases, and doubled on average over the past 10 years... it is up to states whether to exercise that option, just as the degree to which they review rate increases is left to their discretion. Indeed, five states -- Alaska, Georgia, Iowa, Minnesota and Wyoming -- chose not to for the first round of rate review grants."

A new bill would require technology to be blind and deaf-accessible:

The recession led to cutbacks in health care consumption in the US, reports Robert Pear: "Among Americans responding to the survey, they said, 26.5 percent reported reducing their use of routine medical care since the start of the global economic crisis in 2007. This proportion dwarfs the comparable numbers for other countries: 5.3 percent in Canada, 7.6 percent in Britain, 10.3 percent in Germany and 12 percent in France. 'Even in countries with universal coverage, individuals pay some medical care costs out of pocket,' the researchers noted."

Jacob Hacker outlines next steps for health care reform:

Graeme Wood investigates ankle bracelets' potential to dramatically reduce the role of prisons: "There is no reason, as the technology gets cheaper and the monitoring ever more fine-grained, why electronic monitoring could not be used to impose an ever wider range of requirements on an ever wider range of 'criminals.' A serious felon might have every second of his day tracked, whereas a lighter offender like myself--recently caught lead-footed by a traffic camera--might be required to carry a tracker that issues an alert any time I move faster than 65 miles per hour."

Todd Purdum tracks a typical day for Obama and the White House staff:

Aaron Carroll previews how health care companies will game the Affordable Care act: "People who wound up joining the (private) HMOs used 66% less care before joining than those who stayed in the (public) Medicare group. Somehow the private insurance HMOs figured out a way to get the healthy people to jump ship out of the another plan into theirs!...So we had a system where plans were in an exchange like environment. Regulations prevented cherry-picking. And yet, the insurance companies figured out a way to preferentially cover healthy people. And this was competing with a giant government program."

Closing credits: Wonkbook compiled with the help of Dylan Matthews, Mike Shepard, and Sakina Rangwala. Photo credit: Andrew Harrer/Bloomberg News Photo.

By Ezra Klein  |  August 17, 2010; 6:28 AM ET
Categories:  Wonkbook  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: Reconciliation
Next: Political scientists make me happy


Obama's recent comments on the NY mosque issue are an example why I think he is politically inept.

It took him two days to fully annunciate his opinion on the planned mosque.

This makes him look either stupid or insincere.

I actually agree with what he said (they have a right to build, but it is perhaps unwise politically for them to do so at this time or at that location).

It's embarrasing to me a guy who is supposed to be smart can't get the basics correct.

Posted by: lauren2010 | August 17, 2010 7:34 AM | Report abuse

That Sunfish solar panel is interesting, but I'm mostly interested in it as the beginning of bringing solar power to the mainstream. According to the article the Sunfish panels are affordable but will only replace about 20% of a home's power consumption. By the time I can afford to buy a house (hopefully in a couple years), or maybe a couple years after that, hopefully there will be something on the market that will make a bigger dent in power consumption.

And no matter how many times I hear Organ Donor it remains totally awesome. Of course, I'm still listening to that Elizabeth Warren rap from yesterday.

Posted by: MosBen | August 17, 2010 7:34 AM | Report abuse

I wish some politician with a national profile would point out the "mosque" story for what it is: another wedge issue brought up in the run up to an election to distract people from the real, substantive issues that we should be talking about. This is just another gay marriage, swift boat, etc. Dems should just say, "The Constitution ensures that religious groups have a right to practice freely. Beyond that, this is a local issue for New Yorkers and their local officials to resolve."

Posted by: MosBen | August 17, 2010 8:17 AM | Report abuse

That article goes a long way in explaining why I am disillusioned with Obama.

I think he is a good man.

I can even agree with many of his decisions (not all).

But making the right decisions is only a SMALL part of being President. Obama's "incoherence" and ineptness and lack of leadership (e.g. he let the HCR effort take over a year, and made it look like he caused the oil spill and didn't care about it) will now cost Dems big-time in the elections, which in turn will threaten every single good thing accomplished since he took office.

And with regards to the lunatic right (which is most of them), Obama is like a deer in headlights. He has no clue how to fend off right-wing lies and lunacy.

Posted by: lauren2010 | August 17, 2010 8:19 AM | Report abuse

I find the unemployment/suicide story to be very sad.

But I am curious about causation. Did some of the people who commit suicide have previous mental health issues which contribute to their tough employment status? Depression is a beast.

Posted by: laser83 | August 17, 2010 9:17 AM | Report abuse

You just run the numbers on the solar stuff and shake your head.

Assuming the average electricity bill is on the order of $92, then that $3-4000 unit will save you $16ish a month, $240 per year. That optimistically puts you at 15 years to pay for itself. Do the panels last that long? Borderline. Is that 160 kWh realistic, around the country, year round? Probably a no there too.

And when I say "pay for itself", I'm really comparing it to an investment strategy based around putting the same amount of cash under my mattress.

Were I to put that $4000 in my 401K instead, I'd get my 100% match or whatever, and after 15 years I'm at $12.5K even at a 3% return (which is below a conservative dividend rate), $22K at 7%. And these are probably lower risk investment options than the panels.

In a carbon-tax world, maybe my electricity bill is $300, then this thing makes me $50 per month, $600 per year (actually, I'd probably cut my electricity usage if the cost per more than tripled, but that doesn't effect this analysis). They'd certainly be more popular, and the economics of scale would drive price down a bit,

but even if they didn't, this would be paying for itself in 6 years. And perhaps twice more during its operational life. Still probably losing to my 401K, but I can enjoy the money this is spitting out before I turn 63 or whatever.

Coal energy is too cheap. We don't need technological innovation, the technology already exists.

Posted by: eggnogfool | August 17, 2010 9:18 AM | Report abuse

the mosque issue is indeed a red herring election issue.

That's why I am disappointed in the way Obama fumbled it.

The GOP is laughing their butts off at how inept Obama is.

Obama couldn't even get the swearing in oath correct.

Posted by: lauren2010 | August 17, 2010 9:34 AM | Report abuse

eggnogfool, I found that article a little confusing. Was the 160kWh figure for their ~$800 system or was it if you bought five modular units and linked them together?

Also, where'd you get that figure for average electric bill? That seems kind of low to me.

Posted by: MosBen | August 17, 2010 10:09 AM | Report abuse

the Mark Zandi? who cares? the Lewis Ranieri (arguably the creator of the market for mortgage backed securities) is on the list ( )

Posted by: bdballard | August 17, 2010 10:21 AM | Report abuse

"The largest Sunfish kit, with five solar panels, will produce 150 kilowatt hours per month, "

It's for their big linked system. As he says, it would cost like $40,000 to have something that covered your electricity costs.

I used $92 because it makes the math easy; it's a bit higher than our bill, but not a lot. I should check to see how many kWh we use though.

Posted by: eggnogfool | August 17, 2010 10:21 AM | Report abuse

I didn't notice until now, but Geitner really looks like he's rocking a mic there.

Posted by: MosBen | August 17, 2010 2:08 PM | Report abuse

Post a Comment

We encourage users to analyze, comment on and even challenge's articles, blogs, reviews and multimedia features.

User reviews and comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions.

characters remaining

RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company