What’s a shady subprime mortgage broker to do when the housing market goes belly-up? Become a shady loan modification firm instead, perhaps without even changing offices, The New York Times reports in a long front-page story. The Times account focuses on one California-based company, now being sued by the Federal Trade Commission, that took thousand-dollar fees from desperate homeowners and then did next to nothing to help them—but the practice was apparently widespread. “We just changed the script and changed the product we were selling,” says one of the company’s founding partners, who later adds, “I’m not a shady person.”
The Times also carries news that CIT Group, last seen having its aid pleas rejected by the federal government, has apparently negotiated a deal with its bondholders that will allow it to avert a bankruptcy filing. The company is a leading commercial lender; according to the Times, “a failure of CIT could have sent ripple effects through the nation’s small and midsize businesses.” In other financial-sector news, White House chief of staff Rahm Emanuel has declined an invitation to speak to the board of JPMorgan Chase, after White House attorneys raised concerns about the appearance of a conflict of interest.
The Wall Street Journal today offers a dispatch from Las Vegas, where the tourism boom has died and taken a piece of the American Dream with it. According to the paper, “The city offered something almost no other place in America did: upward mobility for the working class.” But now the region, which had seen explosive growth, is actually declining in population, while unemployment is spiking.
The federal stimulus package, meanwhile, continues to come under scrutiny from all sides. The Los Angeles Times reports today work has yet to begin on nearly two-thirds of the road construction projects authorized under the bill. The piece also explains why the media has fixated on highway improvements as an indicator of the stimulus bill’s success, when they account for a small portion of the total $787 billion package: transportation projects are expected to be among “the most powerful in terms of potential economic impact per dollar”; they are also “seen as an important symbolic measure.”
The Boston Globe, meanwhile, takes a close look at one particular project that’s been slow to start. Oregon’s Bonneville Dam was built during the New Deal and become an icon of that era’s investment in public works. A new initiative funneling billions to the Bonneville Power Administration’s wind power grid seemed a symbolic bookend, but “the number of jobs created won’t come close to matching the army of impoverished loggers who signed on to mix concrete and install Bonneville’s massive turbines during the depths of the Depression.”
Today’s stories come on the heels of a Sunday Associated Press report, carried in the Houston Chronicle, that concluded that “less than half the federal highway money announced so far is directed toward those high-unemployment, low-income areas” that were supposed to receive priority. The article notes that the percentage of funds going to poorer areas varies widely by state. It also acknowledges that in some states, “steering money to economically distressed areas would mean shifting it away from population centers,” which could lead to the inverse criticism—represented by a recent The New York Times story—that too much highway funding is going to rural areas (which are often poorer) rather than urban centers.
In the midst of all the complaints, one voice counsels patience. While much attention is focused on how quickly work begins on “shovel-ready” projects, tax cuts, aid to states and stepped-up safety net spending were all important parts of the stimulus, The Daily News Tribune of Waltham, Mass. editorialized Sunday. The job-creation measures, meanwhile, will bear most fruit in 2010 and 2011. “Do those who want to pull back the stimulus spending believe the economy won’t need new jobs and investment next year and the year after?” the paper asked.