Economy Watch: Homebuilders a Little Less Glum, Obama Nominates Richard Cordray for Consumer Financial Protection Bureau, No Debt Ceiling Deal Yet
- Jul 19, 2011
July 19, 2011
By Dees Stribling, Contributing Editor
The National Association of Home Builders reported on Monday that U.S. homebuilders are actually feeling a little more confident this month than last. Builder confidence, as reflected by the NAHB/Wells Fargo Housing Market Index, was up from a woefully weak 13 in June to a slightly less woefully weak 15 in July. Any reading under 50 and the homebuilders are pessimistic.
Two out of three of the component indexes rebounded in July from declines in the previous month. The current sales conditions component rose two points to 15, thus returning to its May level, while the component gauging sales expectations in the next six months rose a more impressive seven points to 22, which is where it stood in April. At 12, the component gauging traffic of prospective buyers held even with the previous month.
“We view the upward movement as a correction from an exceptionally weak number in June that was at least partly attributable to negative economic news and the close of a disappointing spring selling season,” said NAHB chief economist David Crowe in a statement. “The strong rebound in sales expectations for the next six months likewise marks a return to trend. Basically, the market continues to bounce along the bottom, with conditions in some locations beginning to improve.”
Cordray Tapped for New Consumer Protection Agency
President Obama has formally nominated former Ohio Attorney General Richard Cordray as head of the newly created Consumer Financial Protection Bureau, which officially kicks off later this week. Lately Cordray has been working for Elizabeth Warren, who has been setting up the new agency in an advisory position (but as de facto head). Warren herself wasn’t considered a viable official candidate for the post, since too many Republican members of Congress dislike her.
While Cordray was AG of Ohio, his office sued GMAC Mortgage L.L.C. and its corporate parent, Ally Financial Inc., for various financial shenanigans involving fraudulent affidavits in foreclosure cases. He also instigated litigation against the likes of Bank of America Corp. and American International Group. Before being Ohio AG, he had held other appointed and elective offices in that state (and, in a nonlegal setting, won the game show Jeopardy! five times in a row in 1987).
But it isn’t clear yet whether the necessary 60 Senators will support confirming Cordray in the post. Not so much because of his abilities or background, but because of demands by Congressional Republicans to change the structure of the Consumer Financial Protection Bureau, which they call necessary reforms. Supporters of the bureau as created by the Dodd-Frank financial regulation overhaul, mostly Democrats, say the changes would amount to watering down the new agency’s powers.
No Debt Ceiling Deal Yet
The economic news of the day on Monday wasn’t interrupted by any surprise revelations from Washington about the federal debt ceiling. Seemingly no progress was made, though the nation can only hope that something fruitful is going on behind closed doors, such as at the “secret” meeting of President Obama, Speaker Boehner and Rep. Eric Cantor over the weekend. Indeed, much of the nation probably hopes the situation will be resolved. According to a CBS News poll, support for increasing the debt ceiling has spiked from 22 percent last month to 46 percent this month, with opposition falling from 69 percent to 49 percent.
Perhaps the message is getting out that a default by the United States could be compared to driving a very large bus–one with about 300 million passengers–off a cliff. There still seem to be some diehards in Congress who would be happy to take a bus plunge in the name of fiscal rectitude, however.
Wall Street seemed a mite jittery on Monday, perhaps about the lack of resolution on the debt ceiling, with the Dow Jones Industrial Average dropping 94.57 points, or 0.76 percent. The S&P 500 lost 0.81 percent and the Nasdaq declined by 0.89 percent.