by Calculated Risk on 1/10/2010 08:39:00 AM

From Kenneth Gosselin and Dan Harr at The Hartford Courant: Boston Fed Chief Expects Mortgage Rates To Rise This Spring (ht MrM)

Eric S. Rosengren, president and chief executive of the Boston Fed, said in an interview at The Courant that he expects [mortgage] rates to rise when the [Fed MBS purchase] program ends — or before, as the end approaches.

"Actually, I've been surprised that we haven't seen more of a backing up already," Rosengren said. "You maybe would have thought you would have seen rates move up more quickly than they have, but nonetheless that is a concern."
...
The mortgage rate increase of one-half to three-fourths of a percentage point from the end of the Fed program would happen regardless of any Fed action in interest rates, Rosengren said.
...
Rosengren said the Fed could choose to extend the mortgage buying program if the economy deteriorated dramatically.

"That's not in our forecast," Rosengren said. "That's not what we're expecting."

So Rosengren is expecting a 50 to 75 bps increase when the Fed MBS purchase program ends. That is slightly higher than my forecast of 35 to 50 bps.

by Calculated Risk on 1/09/2010 09:46:00 PM

Off topic: In 2006, Calvin Trillin predicts ... (click link if embed doesn't work)

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Moment of Zen - Calvin Trillin's Prediction
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

by Calculated Risk on 1/09/2010 06:27:00 PM

Tough times for the "have nots" ...

For the Unemployed, New Job Often Means a Pay Cut

but not so bad for the "haves" ...

From Louise Story and Eric Dash at the NY Times: For Top Bonuses on Wall Street, 7 Figures or 8?

Bank executives are grappling with a question that exasperates, even infuriates, many recession-weary Americans: Just how big should their paydays be? Despite calls for restraint from Washington and a chafed public, resurgent banks are preparing to pay out bonuses that rival those of the boom years.

And in the UK from James Quinn at the Telegraph: Record bonus pot at JP Morgan

JP Morgan's pay-out looks set to be the highest ever offered by the bank. Based on analyst consensus, it will be 28pc up on 2008 and 2007 levels ... The investment bank's refusal to rein back bonuses is likely to be seen as an act of defiance both by the US and UK governments.

It must feel good to be a bankster! (thread music)

by Calculated Risk on 1/09/2010 02:21:00 PM

CR Note: This is a guest post from albrt.

CR sent along this story concerning a foreclosure case in California (ht Lyle). The homedebtor enjoyed some initial success arguing a non-judicial foreclosure was a violation of due process. As it happens I'm out of the country, so this will be a relatively short post.

The homedebtors are named Huxtable and Agnew. Interestingly, Agnew is also listed as the "lead attorney" for the plaintiffs. The plaintiffs defaulted in late 2007, and the bank began a non-judicial foreclosure process in late 2008. The plaintiffs filed suit in federal court to stop the foreclosure, naming as defendants Timothy Geithner, the FHFA the lender and the servicer. The plaintiffs were allegedly denied a HAMP modification, and they claim the government and the bank violated the plaintiffs' right to "due process under the Fifth Amendment for failing to create rules implementing HAMP that comport with due process."

The bank tried to have itself dismissed from the case because Fifth Amendment procedural due process applies to the government, not private companies. For whatever reason, this bank apparently considers itself a private company and not part of the federal government at this time. The judge refused to dismiss the case because the plaintiffs might be able to prove the government has "insinuated itself into a position of interdependence" with the bank. The phrase seems apt, felicitous even, and perchance in the fulness of time may prove to be widely applicable. But this is only a very preliminary decision, and the court will need to take a look at the relationship between this particular bank and the government.

The court may also need to consider whether the plaintiffs have any constitutionally protectable interest. The Fifth Amendment says, among other things, that no person may be "deprived of life, liberty, or property, without due process of law." A deeply underwater homedebtor facing a lawful non-judicial foreclosure process may not have much property interest in the home. It is possible to have a property interest in certain types of government benefits if the benefits are an entitlement explicitly created by law. It is not clear whether HAMP creates such an entitlement, and that may end up being the main issue in the case.

Due process was a mildly hot topic in the comments a few weeks ago, so I'll provide some additional thoughts on the subject next weekend. Please leave questions and suggestions in the comments here and I'll check back later.

The text of the Huxtable case is available at a foreclosure consultant site here, which also has a number of other foreclosure cases. I haven't been able to follow the comments while traveling, and I probably won't be able to monitor the comments for this short post, so sorry if I've overlooked a hat tip.

CR note: The opinion is interesting reading! This is a guest post from albrt.

by Calculated Risk on 1/09/2010 12:02:00 PM

There have been a number of comments about the recent collapse in the labor force participation rate. The rate has declined from 65.4% in July to 64.6% in December.

If the participation rate was at the same level as in July, the unemployment rate would probably be around 10.8%.

This gives me an excuse for a long term graph.

Click on graph for larger image in new window.

This graph shows the total participation rate, and for men and women, starting in 1948. Although there are still far more men in the labor force than women (we are talking labor force, not payroll jobs!), the participation rate for men has been declining for decades. The participation rate for women was increasing steadily until the late 90s, and has decreased slightly since then.

However, since July, the participation rate for both men and women has fallen sharply. For men, the rate has fallen from 72.0% to 71.0%, or a decline of 801,000 men.

For women, the rate has fallen from 59.2% to 58.6%, or a decline of 491,000 women.

This is a total of almost 1.3 million people who have left the labor force since July. This is a key reason the unemployment rate is only at 10.0%.