KeNo's Housing and Economic Portal: Saturday August 15 Housing and Economic stories

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TOP STORIES:

Alabama's Jefferson County Lays Off Two-Thirds of Employees – (www.reuters.com) Alabama's debt-ridden Jefferson County laid off about two-thirds of its 3,600 employees on Monday because of plummeting revenues, a move that will sharply curtail services in areas ranging from roads to courthouses. The cuts are just the latest blow to Jefferson, whose population of 660,000 includes Birmingham, the state's largest city and its economic powerhouse. They come after the county racked up around $4 billion in debt by using exotic financial instruments to fund a revamp of its sewer system. The work-force cuts will hit the roads and transportation, revenue and security departments, and reductions will also affect the courthouse and information technology department as well as laborers paid on an hourly basis, according to a senior county official. One senior county employee said his land development department was slashed from 29 employees to just eight but they were nevertheless adjusting, a process eased because there were fewer queries from the public on Monday. "Our traffic has slowed (because) ... people are following the news. People did not take a chance by waiting until this week to do their business," said Bo Duncan, deputy director of land development at the county. "We are having to make do," he said. For some families, the layoffs were particularly hard, he said, adding he knew one family in which both husband and wife had lost their jobs. Jefferson County has been forced to make drastic cuts because of a lawsuit questioning the legality of a county occupational tax, which raised $78 million annually and was vital to the county's operation. Although the revenue is still being collected, it is being held in escrow under orders from an Alabama Supreme Court justice pending a decision on the tax case. Some members of the state Legislature hope to pass a new tax bill this month to raise revenue for Jefferson County. County workers placed on administrative leave under the cuts will be entitled to unemployment and some health-care benefits and will be called back after 45 days, according to a senior county official.

Alumna sues college because she hasn't found a job - (money.cnn.com) A recent college graduate is suing her alma mater for $72,000 -- the full cost of her tuition and then some -- because she cannot find a job.Trina Thompson, 27, of the Bronx, graduated from New York's Monroe College in April with a bachelor of business administration degree in information technology. On July 24, she filed suit against the college in Bronx Supreme Court, alleging that Monroe's "Office of Career Advancement did not help me with a full-time job placement. I am also suing them because of the stress I have been going through." The college responded that it offers job-search support to all its students. In her complaint, Thompson says she seeks $70,000 in reimbursement for her tuition and $2,000 to compensate for the stress of her three-month job search. As Thompson sees it, any reasonable employer would pounce on an applicant with her academic credentials, which include a 2.7 grade-point average and a solid attendance record. But Monroe's career-services department has put forth insufficient effort to help her secure employment, she claims. "They're supposed to say, 'I got this student, her attendance is good, her GPA is all right -- can you interview this person?' They're not doing that," she said. Thompson said she has fulfilled her end of the job-search bargain, peppering companies listed on Monroe's e-recruiting site with cover letters, résumés and phone calls. But no more than two employers have responded to her outreach, and those leads have borne no fruit. Her complaint adds, "The office of career advancement information technology counselor did not make sure their Monroe e-recruiting clients call their graduates that recently finished college for an interview to get a job placement. They have not tried hard enough to help me." She suggested that Monroe's Office of Career Advancement shows preferential treatment to students with excellent grades. "They favor more toward students that got a 4.0. They help them more out with the job placement," she said. iReport.com: "Don't sue your alma mater" Monroe College released a statement saying that "while it is clear that no college, especially in this economy, can guarantee employment, Monroe College remains committed to working with all its students, including Ms. Thompson, who graduated only three months ago, to prepare them for careers and to support them during their job search." Thompson says she has not hired an attorney to represent her because she cannot afford one. When she filed her complaint, she also filed a "poor person order," which exempts her from filing fees associated with the lawsuit. Asked whether she would advise other college graduates facing job woes to sue their alma maters, Thompson said yes. "It doesn't make any sense: They went to school for four years, and then they come out working at McDonald's and Payless. That's not what they planned."

Biggest Banks Come Up Short on List of Mortgage Modifications - (www.bloomberg.com) Bank of America Corp. and Wells Fargo & Co. were the worst performers among the biggest U.S. banks in modifying loans for struggling homeowners, according to a Treasury Department report. Bank of America began 27,985 trial loan modifications, or 4 percent of its eligible loans, under the government’s Making Home Affordable program started in March, the report today shows. Wells Fargo had a 6 percent rate, trailing JPMorgan Chase & Co.’s pace of 20 percent, and Citigroup Inc.’s 15 percent. “Some of the servicers could have ramped up better, faster, more consistently,” Michael Barr, the assistant Treasury secretary for financial institutions, told reporters in a conference call today. “We expect them to do more.” The government is trying squeeze better results out of its main anti-foreclosure program, which has put about 235,000 borrowers on the path to loan modifications out of the 4 million targeted for help. National Economic Council Director Lawrence Summers has said the Treasury report is an effort to create transparency about which mortgage servicers are helping most. “The biggest servicers certainly have the biggest ships to turn,” Seth Wheeler, a deputy assistant Treasury secretary for federal finance said in an interview yesterday before the report was released. “Some of the strongest performers are smaller servicers, but it’s not a uniform correlation.” The report shows the levels of homeowner assistance for the 38 companies participating in President Barack Obama’s $75 billion loan modification program. The Obama administration said last month that it’s setting a goal of starting at least 500,000 trial modifications by Nov. 1.

Income Loss Persists Long After Layoffs - (www.nytimes.com) Chuck Dettman said he had not really considered the notion back in 2001 that he and his friends in a job-search support group would never recover from being laid off. The country was in a recession then, as now, and the professionals who had just lost their jobs met weekly at a local job center to network and trade advice. Despite the national economic problems, they remained confident that they would not only find work but would also be compensated as they had been in the past. Eight years later, however, most of the people who formed the core of Mr. Dettman’s group have not made it back to their old income levels, even if they eventually landed jobs. “I think there’s maybe only one or two that have been successful in making what they did then,” Mr. Dettman said. Taken together, their struggles are stark illustration that it can take years for a worker’s earnings to bounce back after a layoff, and that it can take even longer for a layoff during a recession. Economists, in fact, say income losses for workers who are let go in a recession can persist for as long as two decades, a depressing prognosis for the several-million people who have lost their jobs in the current recession. “On average, most workers do not recover their old annual earnings,” said Till von Wachter, an economics professor atColumbia University, who recently completed a working paper with two other economists that examined the long-term earnings of workers who lost their jobs in the recession of the early 1980s. Mr. Wachter studied workers who had been with their companies at least three years, then lost their jobs when their employers reduced their work forces by at least 30 percent. He found that even 15 to 20 years later, most on average had not returned to their old wage levels. He also concluded that their earnings were about 15 percent to 20 percent less than they would have been had they not been laid off. One of the main reasons for the drop-offs, according to economists, is that workers who endure a layoff are more likely to be laid off again. “What tends to happen is the worker has to start over with a new employer, sometimes in a new industry,” said Ann Huff Stevens, an economics professor at the University of California, Davis. “You’re at the bottom of the totem pole again.” (Although some unqualified workers are undoubtedly laid off, Mr. Wachter said he tried to correct for that possibility in his study. He focused on large-scale layoffs to ensure he was following mostly workers who lost their jobs through no fault of their own.) The largest wage losses are typically for workers who had long tenures at their previous companies. The stability often allows them to build up skills specific to their employers or their industries and to accrue corresponding wage increases, but those skills can be worth less to other companies. Older workers’ wages usually slide more than those of younger workers. Those with college degrees do slightly better than those without.

Dueling Public Interests In Policing Rescued Firms - (www.washingtonpost.com) Late last month, the Securities and Exchange Commission was poised to file suit against a subsidiary of Alabama-based Regions Financial for selling nearly $1 billion in troubled investments. But the agency faced a new dilemma: Regions was on the list of the nation's most troubled large banks and had received $3.5 billion in taxpayer aid. SEC officials considered that filing suit to force Regions to buy back the troubled investments could hurt the bank. Should the agency act, or should it hold off to protect the government's investment? The SEC decided to file. But the quandary shows the difficulty facing the nation's top Wall Street cop at a time when the economic crisis has left the U.S. government as the part-owner or controller of an unprecedented array of financial companies. Protecting investors on the one hand could mean harming taxpayer-owners on the other. And some troubled firms could wind up paying penalties with taxpayer money from the federal bailout. "Normally the SEC's focus is on the protection of investors -- that is, people who are trading securities in capital markets," said James Cox, a securities law professor at Duke University. "With the government being a substantial stockholder, you could well think the SEC's consideration could extend to matters that relate to the financial success of the firm itself." On Monday, the SEC faced another awkward question: How to pursue cases when government officials may have played a role in alleged wrongdoing? The agency charged Bank of America with violating securities laws for hiding from investors plans to pay billions of dollars in bonuses to employees of Merrill Lynch, the troubled investment bank it bought. The charges, which Bank of America settled, intensified concerns on Capitol Hill that the Treasury Department and the Federal Reserve may have been involved in efforts to avoid the disclosure of facts that could have derailed the deal.

OTHER STORIES:

Market pauses from recent runup, stocks open lower - (finance.yahoo.com)

Oil falls below $71 after big rally - (finance.yahoo.com)

Dollar, yen rise as international equities pare gains - (www.marketwatch.com)

Market for leveraged loans hits 12-month high - (www.ft.com)

Consumer Spending Picks Up, While Incomes Decline - (www.cnbc.com)

Joblessness May Be Lasting Scar From Recession - (www.cnbc.com)

US Bank Regulators Dig In Against Obama Shake-Up - (www.cnbc.com)

Official says China's jobless situation 'very grave' despite improving economy - (www.latimes.com)

Russia’s ‘Unsustainable’ Deficit Threatens Growth, Troika Says - (www.bloomberg.com)

China Banks Drop on Report Capital Requirement May Be Tightened - (www.bloomberg.com)

Opposition Woos Japan’s Voters With Costly Vows - (www.nytimes.com)