COLUMBIA, S.C. — South Carolina was given $31 million from a lawsuit settlement to help homeowners who can’t pay their mortgages, but the majority of lawmakers want to spend the cash elsewhere.
Among other things, the GOP-controlled Legislature wants to use the infusion to recruit new businesses.
The money in question is the state’s portion of a settlement involving five of the country’s largest loan providers to resolve state and federal investigations into illegal foreclosure practices.
Democrats in the state House and Senate have argued more of the cash should go to help the families who were hit hard in the foreclosure crisis.
“We’ve got their money, and we don’t want to return it back to them,” said Sen. John Scott, D-Columbia. “There’s something wrong with that kind of attitude when the rest of the time you say you want to give money back to the taxpayers.”
Republicans argue bringing new business to the Palmetto State will help those struggling to make house payments.
Anderson GOP Rep. Brian White, the chairman of the House Ways and Means Committee that designed the House budget, said the House didn’t neglect homeowners when it set aside the settlement money for business incentives.
“Our thought process was that the Commerce Department would be able to recruit and get people out working,” he said. “You get people employed, that’s a house payment and a paycheck.”
White said there are also lots of federal programs and agencies already assisting homeowners facing foreclosure.
The diversion of the funds is legal, the product of broad language in the $25 billion settlement that effectively gives states wide discretion to use the funds as they please.
More than a dozen states are diverting the money. But only a handful intend to spend essentially none of the funds for housing, according to a recent report by Enterprise Community Partners, a national group that advocates for affordable housing.
In its version of the budget, the S.C. House sent the bulk of the state’s settlement money to the Commerce Department’s Closing Fund, incentives used to entice companies to come to South Carolina.
The Senate’s budget that sits one vote away from approval moves $10 million from the settlement to the Commerce fund, but sets aside $5 million for the S.C. Housing Authority.
The agency would use the money primarily for legal services for families facing foreclosure and multifamily housing bonds.
The remaining balance of the settlement was put into the general fund in the Senate’s budget.
Sue Berkowitz, the director of the S.C. Appleseed Legal Justice Center, said the group was disappointed the House budget diverted all of the settlement money.
The center is asking senators to provide more of the settlement money to homeowners beyond the $5 million already in the budget.
“If you look at the intent of the mortgage settlement, the whole reason the lawsuit was initiated was because the banks were breaking the law and taking people’s homes,” she said.
While not reaching the highs experienced during the housing crisis four years ago, foreclosures are on the rise in the Lowcountry.
During the first three months of the year, the Charleston metro area’s home foreclosure rate jumped 8.5 percent from a year ago, according to online marketer RealtyTrac.
Language in the settlement gave state attorneys general, including S.C. Attorney General Alan Wilson, sole discretion over the $2.5 billion in direct payments to states included in the agreement.
Wilson wanted the money to be spent primarily on a consumer protection enforcement fund, a consumer education fund and consumer restitution.
Wilson however doesn’t control the state budget, and lawmakers didn’t go along with his plan.
According to Wilson’s office, the state received an additional approximately $16 million from the settlement beyond the $31 million in the form of direct reimbursements to borrowers.
That money will be doled out to people who have already had their homes foreclosed on.
Crossing guard turns in money hanging from ATM - Orlando Sentinel
Adriana Allen found $1,800 worth of temptation sticking out of a drive-through ATM Sunday in Boynton Beach.
The bank was closed. No car in front of her. And there for the taking was a stack of money dangling from the deposit slot.
But for Allen, that was somebody else's money — not a windfall that could cover a mortgage payment or finance a shopping spree for the 46-year-old school crossing guard from Boca Raton.
"I drove up to the ATM and there was $1,800 waiting for me," Allen said Monday. "But it's just not right. … That's the way I was brought up. What you don't earn, you don't get."
So, she did the honest thing.
First, Allen tried to feed the money into the deposit slot, but it just wouldn't go, according to the police report.
So she took the money — helping the next ATM user avoid temptation — and called the police.
"They couldn't believe that I was calling for that," said Allen, who had just come from a mall shopping trip when she found the money.
A Boynton Beach police officer arrived at the Chase bank branch at 555 N. Congress Ave.
There with Allen, the officer counted the $1,800, all in $100 bills.
"It's a good story," Police Department spokeswoman Stephanie Slater said. "This woman is a great example of what you should do."
While giving back the money is the legal, and many would say moral, obligation, how many other people would turn away from the chance to pocket $1,800 during these tough economic times?
More people than you might think, according to ethics professor Robin Fiore, who serves on the Palm Beach County Ethics Commission.
People tend to do the right thing when others are watching, and most people know that a bank drive-through is under the watchful eye of security cameras, said Fiore, director of special ethics initiatives for the University of Miami Ethics Programs.
For example, studies show that more people wash their hands in the bathroom when other people are in there with them than when they are alone, Fiore said.
"If people think they are being watched, they are on their best behavior," Fiore said.
Economic need wouldn't necessarily be the driving force behind someone taking the money, Fiore said. Good character is more about habit, she says, choosing to do the right thing because that's what someone normally does.
Likewise, if someone has a history of unethical behavior or surrounds themselves with unethical people, they would be more likely to take the money, even if they didn't need it, Fiore said.
"They will rationalize it. People will make up stories so it's OK," Fiore said. "The longer they hold onto that cash, the more likely it's theirs."
Florida law requires people to turn in money that they find, whether it's sticking out of an ATM machine or piled up on the ground.
STOCKS NEWS THAILAND-Outflows pull index to 3-month low - Reuters UK
Foreign investors have been selling Thai equities in May, stock exchange data shows, reversing four consecutive months of strong buying and pulling the benchmark SET index to its lowest in almost three months.
Net foreign selling in the month to Monday totalled $310 million, after $2.73 billion of net foreign buying in the four months that ended in April.
The fund outflows came in line with the trend in most Southeast Asian stock markets, including Indonesia's $445 million in outflows for the same period, the Philippines' $255 million and Vietnam's $1.72 million, according to Thomson Reuters data.
Foreign flow data for Singapore and Malaysia is not available.
The benchmark SET index rose 0.65 percent to 1,142.55 at the mid-session break at 0530 GMT, recovering on improving sentiment elsewhere in Asia. Citigroup maintains its year-end SET index target at 1,240.
"While bullish medium-to-long term on the private investment up-cycle, we prefer to maintain our year-end SET ... Near-term threats from deteriorating global and regional growth sentiment and rising cost pressure could trigger a correction toward 1,060," Citi said in a report.
"The imminent correction will likely be milder," it said, citing better domestic growth visibility, driven by the private investment cycle. The Chinese authorities ending tightening policies and clearer liquidity policy stance from all major Central Banks would be supportive, it said.
1317 (0617 GMT) (Reporting by Viparat Jantraprap in Bangkok; viparat.jantraprapaweth@thomsonreuters.com; Editing by Gopakumar Warrier)
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11:38 Stanley up on auto sector recovery
Shares in auto-parts manufacturer Thai Stanley Electric Pcl STAN.BK hit a one-week high on expectation of a recovery in auto production which was hit by floods in Thailand late last year.
Stanley shares were up 1.6 percent at 191 baht ($6.09), climbing at one point to 193 baht ($6.16), the highest since May 14, outpacing a 0.8 percent gain of the auto subindex .SETAU and a 0.3 percent rise of the benchmark SET index .SETI.
Four out of six analysts tracking the company rate it a buy or strong buy, one rate it a hold and one gives it a sell rating.
Broker Phillip Securities pegged the stock's target price at 210 baht ($6.70), reflecting an earnings upgrade partly due to a resumption of production at Honda 7267.T, one of Stanley's major clients, and its capacity expansion.
"To reflect a faster-than-expected earnings recovery in the fourth quarter, a resumption of production at Honda in early May 2012 and new orders for eco-cars from Mitsubishi and Suzuki, we raise our fiscal year 2013 sales projection by 3 percent," the broker said in a report.
"Even though the daily minimum wage hike effective in April 2012 would erode Stanley's profitability ... the impact could be offset by corporate income tax cuts and economies of scale," it said.
1130 (0430 GMT) (Reporting by Viparat Jantraprap in Bangkok; viparat.jantraprapaweth@thomsonreuters.com; Editing by Robert Birsel) ($1 = 31.345 baht)
Latin American Stocks Mixed; Declines for Oil, Metals Dragging on Markets - NASDAQ
Latin American stocks are mixed Tuesday, as positive data on U.S. home sales was overshadowed by weaker-than-expected retail sales in Mexico. Energy and material stocks are mostly lower, following declines in commodity prices.
In the U.S., existing-home sales rose a seasonally adjusted 3.4% in April and 10% year-over-year. But Mexican retail sales slowed during March, slipping 0.53% from February while rising 4.3% from year-ago levels, according to the National Statistics Institute.
Here's where the Latin American markets stand this afternoon:
- Ibovepsa down 1,120.17 (-1.98%) to 55,470.07
- IPC (Mexico City) up 66.97 (+0.18%) to 37,579.38
- Santiago Index IPSA up 40.11 (+0.95%) to 4,279.82
- Merval Buenos Aires up 51.78 (+2.36%) to 2,245.49
In company news, U.S.-listed shares of Net Communications Services ( NETC ) are up slightly more than 2% this afternoon after the telecom stock got an upgrade from TheStreet Ratings from hold to buy.
In its commentary explaining the upgrade, TheStreet said NETC is demonstrating strong revenue growth, expanding profit margins and good cash flow from operations outweighing the company's rather weak EPS growth in recent quarters.
NETC reported earnings of $0.19 per share during its December 2011 quarter, down from a $0.23 cents per share in the year-ago quarter. It blamed the decline in net income on higher tax burden.
Real Gold Price Holds the Cards for Gold Bullion and Gold Stocks - marketoracle.co.uk
By: Jordan_Roy_Byrne
We often write about the real price of gold (RPG) as it is a leading macro indicator and leading indicator for gold stock fundamentals. The RPG is simply a measurement of Gold in terms of various markets such as commodities, stocks or currencies. If the RPG is broadly outperforming then it could be signaling credit stress and even an economic contraction. If equities and commodities are outperforming Gold then it signals an improving economic environment and an improving credit environment. We also note that a strengthening RPG in itself is a catalyst for improving margins for gold miners. Furthermore, since a rising RPG is a contractionary signal, it can also be a catalyst for Fed action. The RPG appears to have bottomed and looks likely to trend higher in the coming months.
Note that during the financial crisis of 2008, the real price of gold began rising several months before gold itself. In the chart below we plot gold, gold/commodities, gold/foreign currencies, and gold/stocks. gold/commodities bottomed in June while gold bottomed relative to both currencies and stocks in September. Turning to the present, we see that gold/commodities has maintained an uptrend during a corrective period while gold priced in foreign currencies has rebounded from support and while gold relative to stocks may have just bottomed.
As we’ve written many times, the RPG can be a leading indicator for the miners. Below we show the HUI/gold ratio, the HUI, the gold/oil ratio and gold/industrial metals ratio. Note that significant advances in the gold/oil and gold/metals ratios initiated two strong cyclical bull moves in the gold stocks from 2001-2003 and from 2008 into 2011. If those ratios rise to new highs then it would definitely signal the inception of a new cyclical bull in the gold stocks.
While the RPG surged into the 2011 Euro crisis, it wasn’t sustained as the crisis abated and there was no real threat to the economy. However, at present, the RPG is starting to move higher as the Euro crisis intensifies and as economic data continues to disappoint. If these troubles are only temporary then gold stocks will remain in a cyclical bear market. However, if these troubles persist through the summer and into the fall then they should kick-start the next cyclical bull market in the gold equities and a move in Gold to $2000/oz. The reason is simple. Persistent credit stress and a weakening economy will require more Fed action and action from the ECB.
The former is painful as it creates volatility and liquidation events but it also creates opportunities. We saw it in 2008 and we are seeing it now. With regards to the gold shares, proper stock selection is paramount as select stocks will dramatically outperform GDX and GDXJ, even as they recover. GDX recovered more than 300% in a little more than two years. Sounds fantastic right?
Check out the gains from producers over a two and a half year period. These were producers and not exploration or development companies. Now we are not implying that these numbers will be duplicated from 2012-2014 but it is certainly possible since many stocks will be starting from low levels. Simply put, the growth-oriented producers offer the best risk-reward and we urge you to focus the bulk of your capital on this segment of the market rather than speculating on risky exploration stocks. If you’d be interested in professional guidance in this endeavour, then we invite you to learn more about our service.
If you'd like professional guidance in this endeavour then we invite you to learn more about our premium service.
Good Luck!
Jordan Roy-Byrne, CMT
Trendsman@Trendsman.com
Subscription Service
Trendsman” is an affiliate member of the Market Technicians Association (MTA) and is enrolled in their CMT Program, which certifies professionals in the field of technical analysis. He will be taking the final exam in Spring 07. Trendsman focuses on technical analysis but analyzes fundamentals and investor psychology in tandem with the charts. He credits his success to an immense love of the markets and an insatiable thirst for knowledge and profits.
© 2005-2012 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
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US STOCKS-Wall St gains on housing but rally ebbs - Reuters UK
* Facebook shares hit again; off 20 pct from IPO price
* U.S. April existing home sales up 3.4 pct, above forecast
* Fitch cuts Japan debt rating, outlook negative
* Dow up 0.4 pct, S&P 500 up 0.6 pct, Nasdaq up 0.3 pct (Updates to early afternoon)
By Edward Krudy
NEW YORK, May 22 (Reuters) - Financial and housing shares nudged Wall Street higher on Tuesday after U.S. existing home sales rose in April to their highest rate in nearly two years, but gains were capped by investors' concerns about the global economic outlook.
Shares of Facebook Inc fell as much as 9 percent at the open and hurt sentiment about tech shares as doubts about the company's valuation increased after Reuters reported that Morgan Stanley, the lead underwriter, cut revenue forecasts for the social networking site shortly before the IPO.
Sales of existing U.S. homes rose sharply in April and a falloff in foreclosures pushed prices higher - welcome signs for investors worried about the strength of the U.S. recovery after recent weaker-than-expected economic data helped drive a pullback in stock prices.
The news benefited banking and housing stocks. The S&P 500 financial sector index shot up 1.4 percent, with Bank of America Corp up 2.9 percent at $7.03. The Dow Jones U.S. home construction index gained 2.3 percent.
A note of caution was sounded by Richard Ross, a technical analyst at Auerbach Grayson in New York, who said the rally in the U.S. stock market was in question as long as it goes unconfirmed by commodities, emerging markets and the euro currency. At midday on Tuesday, U.S. crude oil futures, gold and the euro were all down sharply for the day so far.
"The fact that the U.S. and Europe have been able to gather themselves for a little two-day rally doesn't necessarily excite me," he said, referring to stocks' modest gains on both sides of the Atlantic. "People's predisposition to continue to buy dollars
The Dow Jones industrial average rose 51.42 points, or 0.41 percent, at 12,555.90. The Standard & Poor's 500 Index added 7.22 points, or 0.55 percent, at 1,323.21. The Nasdaq Composite Index gained 8.19 points, or 0.29 percent, at 2,855.40.
The S&P 500 has bounced for the last two days after a six-day slide that found support at the 1,290 level, which coincides with the benchmark index's 10-month moving average.
Ross said that the S&P 500 could go back to test a level beneath its 200-day moving average at 1,279 and is looking for support at 1,260, another 5 percent below current levels.
"I think we'll get a break of the 200-day and perhaps that's going to be your washout, a false breakdown below the 200-day that scares people and gets everyone leaning on one side of the boat," he said.
Shares of Facebook fell as much as 8.9 percent to a new session low of $30.98 shortly after the open. At Tuesday's session low, the stock was down nearly 20 percent from its IPO price just two trading days after its market debut. At midday on Tuesday, Facebook was down 5.2 percent at $32.29.
On the earnings front, Best Buy Co Inc reported better-than-expected quarterly results, bolstered by a lower tax rate and an extra week as the world's largest consumer electronics chain closes stores and searches for a new chief executive. Best Buy's stock rose 1.8 percent at $18.50.
Underscoring the debt problems that governments around the world are facing, Fitch cut Japan's sovereign credit rating on Tuesday as a political stalemate dims the chance that the country can curb its snowballing debt.
Fitch lowered Japan's long-term foreign currency rating to A plus from AA. It cut the local currency rating to A plus from AA minus. Both were cut with a negative outlook.
The Paris-based Organisation for Economic Co-operation and Development also forecast that global growth would ease to 3.4 percent this year from 3.6 percent in 2011.
Nasdaq OMX Group faces short-term costs from its botched handling of Facebook shares on their first day of trading on Friday, but longer-term repercussions could be more expensive as it struggles to restore its image. Nasdaq OMX shares slid 1.2 percent to $22.50.
(Editing by Jan Paschal, Dave Zimmerman)
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