American Elephants


Here Are the Jobs Numbers for February, More of the Same. by The Elephant's Child

job.fair

Early in each month the employment numbers come out covering the preceding month. Then everybody starts arguing over just what the numbers mean. For example, President Obama accused the Republicans of “living in an alternative reality.” Always helpful.

Obama boasted that the unemployment rate remained below 5 percent in February while 1.5 million workers have entered the labor force in the past three months. Pointing to those indicators, he argued that the economy is strong, not weak as both Republicans and Democrats have claimed on the campaign trail.

That’s true.  The employment rate is 4.9%, right where it was at the end of January. There were 242,000 new jobs. That was a better number than expected. But then Obama’s economists cut the growth forecast for the first quarter from 2.5 percent down to 1.4 percent. That is not good. The numbers of long term unemployed and involuntary part-time workers, and discouraged workers stayed the same. The labor force has grown by 1.5 million over the last three months, the biggest such rise since early 2000. You cannot blame President Obama for latching on to the good numbers and trying to brag a little.

Despite the unemployment rate being at an eight-year low, the number of people on food stamps remains near an all time high — which was 47,636,000 in 2013. The Supplemental Nutrition Assistance Program (SNAP) has been hovering right around 46 million participants since 2011.

President Obama blamed Republicans for slow job growth because they have opposed parts of his economic agenda. Of course they have, President Obama has shown no indication that he has the slightest understanding of economics. He’s been referring to the economic downturn when he entered office as “the Great Recession”, but it officially ended in 2009, in June I believe, and we have been in a 10 year long period when GDP growth did not reach the average of 3% even once. The longest such stretch in history.

President Obama was huffily angry with Republicans for not supporting his wish to raise the minimum wage. Republicans are quite aware that government ordered increases in the minimum wage simply kill jobs, and harm the economy, and are trying to save Obama from his own folly. Well, they are probably not trying to help Obama out, but simply to do the right thing for the economy. Try Googling ‘increasing the minimum wage” and you’ll probably get a sad recital of the unfortunate case of Seattle’s lost jobs. But Leftists never give up.

The problem is that statistics are not exactly exact. When you talk about numbers of households, what size household do you have in mind? The late Judge Scalia had nine children, and at one time that was not uncommon. Now it’s rare. Most households are one or two people. When we talk about jobs, are we talking full time well-paying jobs or part-time second jobs? Minimum wage increases have meant that many small businesses save costs by making their workers part-time, and hiring more part-time workers to fill their needs. Or do you have workers holding down more than one part time job, which is not really an increase at all? Don’t let the complications discourage you from trying to understand what’s happening — just try to understand how complicated it really is.

In February 2015, there were 93,686,000 people of working age who had dropped out of the labor force. In February 2016, there were 94,208,000 people of working age who had dropped out of the labor force. That means that 522,000 more people got discouraged and dropped out of the labor force.

That’s more than twice the number of new jobs that were “created.” And may have something to do with why the numbers of folks needing food stamps stays so high.

Democrats resolutely believe that they can improve the economy by more closely regulating it. They believe that providing generous unemployment benefits helps people when they are down. They believe that most things are better done by the wise people in the government and therefor government needs more money which means raising taxes. They don’t like corporations, and believe their taxes are seldom high enough. And they generally believe that more direction from the government will result in more entrepreneurs, and that new entrepreneurs who make desirable products should be helped out with taxpayer funding.

Republicans believe just the opposite. Free markets and free people. When someone creates a new product, if it’s a good one, the market will respond. Government should not pick winners and losers. Few government officials have spent much time in the free market and don’t understand it at all. President Obama  wants to create more job training programs, though I seem to remember that there were already 45, mostly duplicative.



CFPB: Forget Prudent Banking Rules, Expand “Fair Lending” Or Else! by The Elephant's Child

Richard-Cordray

The Consumer Financial Protection Bureau (CFPB) was formed as a new (and unnecessary) independent agency of the government responsible for ‘consumer protection’ in the financial sector by the much criticized Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act’s passage in 2010 was a misguided response to the financial crisis of 2007-2008 and the subsequent “Great Recession.” It is an independent agency that is part of the United States Federal Reserve. Investors explains:

In a stunning repeat of the conditions that led to the mortgage crisis, banks are increasing their loan risk to reduce government risk as President Obama steps up “fair lending” enforcement.

The Consumer Financial Protection Bureau has issued a fresh warning to lenders who aren’t making enough prime loans to low-income minorities, to take “corrective action” or face discrimination charges.

Meanwhile, there’s new evidence the quality of loans underwritten by the nation’s largest banks is deteriorating, as lenders weaken credit standards under threat of prosecution.

The bureau has put out a 48-page “Fair Lending Report” which urges banks to review home, automobile, business and student lending data for racial “disparities in pricing (and) underwriting.” It also advises putting staff through racial sensitivity training and to aggressively market loans in recession-torn urban areas. The report mentions “discrimination” no fewer than 51 times, Investors says. It also warns lenders that CFPB regulators, working with federal prosecutors , are launching “targeted reviews” of their loan practices by race  looking for violations of “disparate impact.” I don’t know if they have their own SWAT team yet.

CFPB Director Richard Cordray implied that lending discrimination is rampant.

We are working to remove unnecessary obstacles that too many Americans face in the consumer financial marketplace,” he said in the report. “This includes ferreting out discrimination in credit markets, including the markets of home mortgages and auto lending.”

Examinations are “data-driven exercises,” the report stressed, so lenders had better get their numbers right. “Different out comes” by race are a red flag.

Strange. When Obama was inaugurated, it was widely believed that his administration would be acting to bring the races together. Instead, as the most politicized presidency in history, they have sought to keep their base in line by insisting that anything negative in life is caused by racism. Inequality, they insist is rampant, and due to racism.

The Dodd-Frank bill was widely criticized because it did nothing to address the problem of “Too Big To Fail” bailouts. All those “toxic assets”we heard about were loans made to people who could not afford to repay them, because of Democrat demands that bankers ignore the rules of prudent banking and overlook minimum credit scores to increase home ownership among minorities.

The Justice Department has already filed a $175 million lawsuit against Wells Fargo for alleged lending discrimination based on disparate impact. Wells Fargo has eased their minimum credit scores on some home loans to ‘expand access to credit for low-income home buyers.’ Been there, done that. With unpleasant results, as we all know.

The American Bankers Association has issued a “fair lending toolbox” to its 5,000 members to help them avoid disparate impact probes. It suggests they give a second look to rejected loans to minorities. Credit Unions are also worried. It no longer matters if you have a sound credit-scoring system, or follow prudent banking rules.  What matters is what might be perceived as disparate impact. And politics is about perceptions, not facts.

If minorities have trouble getting loans, the response should be— help in raising credit scores and living within your means— not forcing banks to make riskier loans. That would seem to be common sense.




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