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Bank of America has agreed to a $10 billion deal with Fannie Mae, related to the charge that its Countrywide loans were bogusly represented.
Oh, what a difference five years makes! Back in 2008, Bank of America bought Countrywide Financial — then based in Calabasas, Calif. — for $4.1 billion, a fire-sale price at the time given the heights to which the now notorious subprime lender had soared.
But even at that price, Countrywide eventually became a giant concrete-filled truck tire around BofA's neck. In 2011, BofA saw its stock price plummet. CEO Brian Moynihan hadn't done the Countrywide deal, but he was dealing with the ugly aftermath. At one point, when the entire financial services sector was swooning, billionaire investor Warren Buffett swept in to support BofA and put a floor under the fall.
That didn't stop speculation about BofA putting Countrywide into bankruptcy — which would have led to the first big test of a major bank failure in the post-"To Big to Fail" era. I blogged about it at the time:
The labor participation rate has declined dramatically since the Great Recession. But after the 2001 recession, it never really recovered.
Thanks to James Pethokoukis for drawing my attention to the chart above. It shows the civilian labor force participation rate from 2000-present. The labor participation rate has been a sort of "third number" when U.S. jobs data comes out each month. The other two are the headline unemployment rate — now at 8.1 percent — and the level of U.S. economic growth, measured as GDP, which came in at only 1.3 percent for the second quarter. That's troublingly low.
And what about labor participation? It's at levels not seen since the early 1980s. A couple of factors are contributing. First, unemployment is high and job creation is weak; this means that workers are out of the labor force, either drawing or having exhausted unemployment benefits. Second, people are retiring as the first wave of the Baby Boom collects its gold watch.
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Lehman Brothers headquarters in New York on September 15, 2008. The 158-year-old investment bank filed for bankruptcy four years ago.
Tomorrow, September 15, marks four years since Lehman Brothers declared bankruptcy and the financial crisis, complete with TARP and bailouts and more bankruptcies, shotgun mergers, "Too Big to Fail" (see below), and the end of a long, debt-fueled boom economy.
You could make the argument that we're still not recovered — and in fact some experts insist that there never was a recovery and that we're continuing to deal with the aftermath of the worst financial downturn since 1929.
There's little doubt that the U.S. economy is still in bad shape. Unemployment is high at 8.1 percent, fewer Americans are in the job market than at any time since the early 1980s, housing remains a mess in much of the country (especially California), and the national debt recently crossed the $16-trillion mark. The Federal Reserve just announced that it will once again put money into the economy to stimulate growth and hiring and provide a boost to consumption and the housing market.
Take a look at how their economies would stack up if California and L.A. County were countries.
The Commerce Department released its figures for second-quarter U.S. GDP growth this morning. Growth was weak, and that's something to worry about. But it's also an opportunity to compare U.S. growth with California's, and to compare California's to the rest of the world.
Conveniently, the LAEDC recently compiled this data into a nice, neat chart (above). It actually isn't technically possible to compare the GDP of a U.S. state with the GDP of a country, but for the sake of argument you can pretend that California is a country, just to get a sense of how we're doing. Besides, California's economy is so large — nearly $2 trillion in the context of a $15-trillion-plus U.S. economy — that it's routinely talked about as if it were a country.
Indeed, if it were a stand-alone economy, California would be the world's ninth largest, coming in just above Russia and just below Italy. But let's compare California to the rest of the world in terms of growth. First off, the Golden State saw growth last year that was actually better than the U.S. — 2 percent for Cali, versus 1.8 percent for the U.S.
A jobs fair on Los Angeles sponsored by the Congressional Black Caucus. African American unemployment in the L.A. was second only to Las Vegas in severity in 2011.
The University of Redlands Institute of Spatial Economic Analysis (ISEA), part of the business school, has just released a study showing that the unemployment situation is improving in Los Angeles County, as well as in other areas of California. However, ISEA call the improvement "patchy." Obviously, with unemployment in California and the L.A. region running significantly higher than at the national level, any progress is welcome progress.
But for African Americans in L.A., modest improvement is cold comfort. According to a report released earlier this month by the Economic Policy Institute, authored by Algernon Austin, African American unemployment increased in the L.A.-Long Beach-Santa Ana area by 1.8 percent between 2010 and 2011 — to 21.1 percent from 18.3 percent. It may very well have declined since the beginning of 2012, but the fact remains: black unemployment in the L.A. region is running much higher than the national black unemployment rate, which actually rose to 14.4 percent in June from 13.6 percent in May. And it's running nearly three times the national rate, which is currently at 8.2 percent.