Economy Watch: States Question Foreclosure Documentation, Too
- Oct 01, 2010
October 1, 2010
By Dees Stribling, Contributing Editor
In the wake of J.P. Morgan Chase suspending residential mortgage foreclosures in about half the states, as reported by CPE on Wednesday, word is that a number of states themselves have started questioning bank tactics in pursuing foreclosures. On Thursday, for instance, Illinois Attorney General Lisa Madigan, published a statement on the subject.
“With JP Morgan now acknowledging possible abuses in preparing court documents, the impact on homeowners in our state and across the country could be great,” the attorney general said. “As with Ally Bank, if I determine JP Morgan was recklessly signing off on foreclosure filings in our courts, I will hold them accountable. These struggling homeowners deserve better.”
Meanwhile, in Ohio, Attorney General Richard Corday has asked that state’s courts to review all foreclosure cases involving Ally (formerly GMAC Inc.) after that company said that some foreclosure proceedings’ documentation might not have actually been verified by the employees submitting affidavits on them. Also, California, Colorado and Connecticut are investigating the company’s foreclosure practices.
TARP Rides Off Into the Sunset
The much reviled TARP is about to become history in more ways than one, with the emergency measure passed by Congress at the height of the Panic of 2008–and signed by President Bush–set to end its spending phase on Sunday. To hear its more virulent critics tell it back in the program’s early days, it was the beginning of trillions of dollars in endless bailouts.
In fact, the nonpartisan Congressional Budget Office estimates that TARP will have ended up costing about $66 billion, and the rather more partisan Obama administration asserts that the cost will be $50 billion. In other words, for comparison, about 1.8 percent of the entire federal budget for fiscal 2010 for the higher estimate, 1.4 percent for the lower one.
Parts of the TARP program made money. According to the U.S. Department of the Treasury, the program is expected to make about $16 billion on the $250 billion invested in the banking sector. The programs losses are expected to come from the money it gave to American International Group and the auto industry, as well as assistance to homeowners.
US GDP Revised to Slightly Less Sluggish
The Bureau of Economic Analysis revised its figures for the second quarter U.S. gross domestic product to 1.7 percent, up from 1.6 percent. That compares with a GDP increase of 3.7 percent in 1Q10.
The deceleration in real GDP in the second quarter reflected a sharp acceleration in imports and an equally sharp deceleration in private inventory investment, the bureau noted. But those factors were partly offset by an upturn in residential fixed investment, increases in nonresidential fixed investment and in federal government spending, and growth in state and local government spending.
Wall Street nearly had an up day, but bounced downward at the end of trading, with the Dow Jones Industrial Average off 47.23 points, or 0.44 percent. The S&P 500 lost 0.31 percent and the Nasdaq went negative 0.33 percent.