Millions of U.S. Homeowners Still Underwater on Their Mortgages
A staggering number of American homeowners remain underwater on their mortgages a decade after the housing bubble burst, Bloomberg News reported. Almost 4.5 million households — or 9.1 percent — owed more than their homes are worth in the fourth quarter of 2017, according to data firm Zillow, with an estimated 713,000 owing at least twice as much as their property’s value. While the percentage is declining, families in communities with stagnant property values are “trapped in their homes with no easy options to regain equity other than waiting,” said Aaron Terrazas, a senior economist at Zillow. Virginia Beach, Va., Baltimore and Chicago are the hardest hit metropolitan areas, based on effective negative interest rates, according to Zillow.
Commentary: Consumer Financial Protection Bureau's Restructure Is a Step in the Right Direction*
Earlier this month, the Consumer Financial Protection Bureau (CFPB) announced the creation of an Office of Cost Benefit Analysis. Taking a look inside how the organization is structured can reveal quite a bit, according to a commentary in The Hill. The office, housed within the Office of the Director, was inspired by the Federal Trade Commission's Bureau of Economics, the agency previously tasked with enforcing many of the rules currently enforced by the bureau. While the bureau previously had an Office of Research to deal with such matters, it clearly did not place a high priority on that department’s work, according to the commentary. By contrast, at regulatory agencies like the FTC and the Securities and Exchange Commission, the head of economic analysis stands on the same level as the enforcement and regulation chiefs. The FTC's chief economist plays a frontline role in enforcement actions, and stands on the same level as the attorneys when deciding which cases to bring. Having the chief economist report directly to the agency head is the only way to ensure that economic analysis is given adequate weight versus legal analysis when adopting rules and setting enforcement priorities, according to the commentary. *The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.
Philadelphia Shipyard Struggles to Survive on Order Drought
The Philly Shipyard, a remnant of America’s diminished commercial shipbuilding power that has been rescued twice by taxpayers over the last 20 years, is reeling again, the Wall Street Journal reported. The manufacturer is laying off 20 percent of its workforce as it completes work on two small ships, with no more vessels on its order book. The shipyard’s fortunes are tied to the Jones Act, a 1920 law mandating that ships moving goods between U.S. ports must be American-built, owned and operated. The law is there to protect the U.S. shipbuilding industry, under the idea that the industrial capacity is a national-security resource, and Philly has delivered more than half of all Jones Act ocean-going vessels since 2003, including container ships, product tankers and crude oil tankers. But those ships cost at least four times more than vessels built by foreign yards, and American shipowners must shoulder higher insurance premiums and heftier salaries for U.S. sailors compared with operators that use foreign crews. On top of that, business is largely limited to goods shipped from the continental U.S. to Hawaii, Alaska, Puerto Rico and Guam. All other U.S. maritime cargo moves through American ports on foreign-flagged ships.
The Jones Act's effect on Puerto Rico was discussed on a recent ABI Podcast looking at recent economic developments on the island. Click here to listen.
Detroit's Mayor Takes on Gentrification as City Rebounds from Bankruptcy
When Mike Duggan won the Detroit mayoral election in 2013 in the aftermath of the Great Recession, there were roughly 40,000 deserted houses across the city, Yahoo News reported. Under a program that favors renovation over demolition to try to preserve the mid-century architectural character of many of the neighborhoods, that number has now been cut in half, with several units set aside for affordable housing. In this year’s State of the City address, Duggan said that he wants 8,000 more homes demolished, 2,000 sold, another 1,000 renovated and 11,000 more boarded up by the end of 2019. Duggan has also been making headway on other projects and improvements to the city. In 2016, Detroit completed a $185 million streetlight repair project. Police response times have been cut from 50 minutes in 2013 to 14.5 minutes in 2017, and ambulance response times fell from 20 minutes in 2014 to the national average of 8 minutes this year. In April, just three and a half years after Detroit emerged from the largest municipal bankruptcy in U.S. history, the city shed financial oversight by state regulators.
Nominations Now Being Accepted for the 2018 Class of ABI's “40 Under 40” Program!
Nominations are now open for ABI's “40 Under 40” program. This program recognizes outstanding young insolvency professionals who are driven by success, motivated by challenges and are role models for their peers. If you are, or know of, a dynamic insolvency professional who is committed to growth and excellence both professionally and in your community, this is one opportunity not to be missed! Visit the website for additional details on nominations and applications.
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