2012 October FIRE Policy News

Issue Date: 
October, 2012
Newspaper PDF: 

The October issue of FIRE Policy News reports the Obama administration has restructured terms of the federal government’s bailout of Fannie Mae and Freddie Mac. The administration made its move without Congressional approval.

Also in this issue:

  • Credit ratings agency Moody’s Investors Service recently downgraded the ratings of 15 major banks in a move expected to harm the financial results of those institutions.
  • Stockton, California filed for bankruptcy in late June, followed less than two weeks later by another major California city, San Bernardino. These recent municipal bankruptcy filings signal more cities may flee their debt obligations, Moody’s said.
  • Financially strapped homeowners will become even more downtrodden in 2013. A little-known or -understood law is scheduled to reappear, potentially costing those in foreclosure or loan modification thousands of dollars in new tax liabilities.
  • And now for another terrible housing idea: Use eminent domain to “condemn” underwater mortgages, forcibly buy them from mortgage-backed securities investors at rates below face value, and then sell the new mortgages with lowered principal balances to other private investors.
  • France in August imposed a 0.2 percent transaction tax on certain stock purchases. Leaders in Germany, Italy, and Spain are pushing for a similar tax. This hasn’t gone unnoticed among U.S. politicians looking for more things to tax. Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) have introduced the Wall Street Trading and Speculators Act, which calls for a tax on trading transactions.
  • During the toughest economic decade since the Great Depression, the nation’s core cities continued to gain more than their share of the below-poverty-line population in the 51 metropolitan areas with more than 1,000,000 people. Between 2000 and 2010, core cities attracted approximately 10 percent of the increase in population while adding 25 percent of the increase in people under the poverty line.

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