Morning Money Memo…
Thousands of people are being laid off in the mortgage business as banks face-up to the inevitable decline in their refinancing applications. With the rise in mortgage interest rates the years-long boom in refinancing is almost certainly over. The average for a 30-year fixed rate home loan is now over 4.7 percent compared with less than 3.5 percent early this year. Bloomberg News reports that Bank of America will eliminate more than 2,000 jobs and close 16 mortgage offices. America’s largest mortgage lender, Wells Fargo Bank, has told investors its mortgage loans will drop 30 percent in the current quarter compared to the second quarter when rates were still low.
U.S. employers in all regions of the economy plan to hire more workers during the rest of this year. The latest Manpower employment survey finds more than twice as many firms plan to add to staffing levels this fall compared to those that expect to cut jobs. “Things are getting better,” says Manpower’s President Jonas Prising. “The hiring outlook improves across the U.S. as we look into the fourth quarter, which is positive.” But the growth in jobs is still not back to where it was before the recession hit in 2008. “This is a very slowly improving labor market,” says Prising. “You could say it’s unusually slow given the depth of the recession that we’ve been in.” While the economy has improved since the recession, “At this rate it will take us close to seven or eight years to come back to the unemployment levels we had before the recession struck.”
Sentiment has shifted on the stock market. After worrying about a military strike investors are now relieved that an attack could be put off. The Dow Jones index gained 140 points yesterday. Futures suggest a solid start for trading today. Overseas markets are mostly higher with fresh signs the Chinese economy may be in better shape than expected. The price of oil retreated from a two year high. West Texas crude is now just over $109 a barrel
The U.S. government is selling its last financial stake in Citigroup. $2.4 billion in bonds were issued by the bank during the financial crisis in exchange for federal guarantees against the bank’s possible losses. The Federal Deposit Insurance Corp. received the bonds in November 2008 for guaranteeing hundreds of billions in potential losses on loans made by Citigroup. The bank was one of the hardest-hit financial firms during the crisis. It received a $45 billion bailout from the Treasury Department, one of the largest of the rescue program. Citigroup repaid the bailout. The banks said in a regulatory filing that it won’t receive any proceeds from the sale.
A window could open today on the long-secret U.S. spy court that authorizes domestic surveillance programs. The Obama administration is releasing hundreds of previously classified documents to the Electronic Frontier Foundation, to partially settle a lawsuit the group filed for access to court orders, administration memos and other information related to the Foreign Intelligence Surveillance Court.
Facebook and Yahoo both asked a secret intelligence court today to allow them to disclose data on national security orders the companies have received. Both firms filed similar motions with the court that overseas intelligence surveillance law
Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesabc