Government

Once again, Treasury has failed to control excessive executive pay at the expense of taxpayers, according to a report from SIGTARP. After a previous evaluation on executive compensation, SIGTARP found Treasury approved ""excessive"" pay packages and salary increases for executives at three firms that received bailout-funds: American International Group (AIG), General Motors (GM), and Ally Financial. In response to a draft of the SIGTARP report, Treasury expressed disagreement with the findings in a letter.

Three suspects were arrested in California over mortgage fraud charges involving a scheme that claimed to ""kill"" mortgage debt for struggling homeowners, California Attorney General Kamala D. Harris announced Monday. Ronald Vernon Cupp allegedly used six websites to deceive homeowners by falsely claiming to free homeowners from mortgage debt. Randall Gilbert Heyden is accused of assisting Cupp, while Angelle Wertz, a public notary, is alleged to have certified phony legal documents.

After much debate and consideration, an idea that had been brewing in San Bernardino County to address negative equity through the use of eminent domain was rejected Thursday by the Joint Powers Authority (JPA) board. According to a release from San Bernardino County, the board decided against proposals that would consider the use of eminent domain.

The Pending Home Sales Index (PHSI) fell 4.3 percent to 101.7 in December, the sharpest month-month drop since April the National Association of Realtors (NAR) reported Monday. Economists had expected a smaller 0.3 percent decrease to 106.1 from November's originally reported 106.4. The November index was revised down to 106.3. NAR economist Lawrence Yun blamed a tight inventory for the weakening index. Yun also noted the lack of homes costing less than $100,000, especially in the West.

A federal appeals court in Washington, D.C., ruled Friday that the controversial recess appointments made by President Obama in January 2012--which includes the appointment of Richard Cordray as director of the Consumer Financial Protection Bureau (CFPB)--are ""invalid from their inception."" In Noel Canning v. National Labor Relations Board, the court examines the recess appointments of three members of the board--Sharon Block, Terence Flynn, and Richard Griffin, all of whom were appointed January 4, during a three-day Senate break. While he is not specifically named in the court's opinion, Cordray was also appointed to his CFPB post that day.

The last few weeks have seen a deluge of new rules from the Consumer Financial Protection Bureau (CFPB) and other regulatory agencies, but a new report from the U.S. Government Accountability Office (GAO) says the reform process is still coming along slowly. As of the end of 2012, GAO estimates regulators have issued rules for approximately 48 percent of the Dodd-Frank provisions that call for them. Most of the effective deadlines for those rules have not yet been reached, the agency says.

Two housing reports in the week just demonstrated, yet again, economists are not infallible. On Tuesday, the National Association of Realtors (NAR) reported existing home sales for December: 4.94 million against a consensus forecast of 5.1 million. Then on Friday, the Census Bureau and HUD reported jointly 369,000 new homes were sold in December compared with a consensus forecast of 388,000. There are several important housing related reports due out next week, but they will take a backseat to the report on fourth quarter GDP and Friday's report on the employment situation.

The new servicing rules recently issued by the Consumer Financial Protection Bureau (CFPB) will benefit the mortgage servicing industry by creating uniform standards, but it will also increase compliance costs for the servicers, which will put pressure on smaller-sized entities, according to a report from Fitch Ratings. ""[S]imilar to other servicing-focused initiatives, the CFPB rules will further increase compliance costs for the industry, extend timelines, and potentially drive further consolidation within mid to smaller servicers,"" Fitch stated.

New home sales fell 7.3 percent in December to an annual pace of 369,000, the sharpest monthly drop in almost two years, the Census Bureau and Department of Housing and Urban Development reported Friday. Economists surveyed by Bloomberg expected the report to show a sales rose to 388,000. The monthly drop in sales was the largest since February 2011, when sales fell 11.4 percent. Nonetheless, December 2012 sales were up 8.8 percent over December 2011.

The Federal Housing Finance Agency (FHFA) and General Electric (GE) have reached a settlement to resolve claims of misrepresented mortgage-backed securities (MBS) sold to Freddie Mac. The settlement brings to a close one of 18 legal actions filed by FHFA against various financial institutions in its capacity as conservator for Fannie Mae and Freddie Mac. FHFA's suit, filed in 2011, alleged GE misrepresented the quality of loans contained in $549 million of MBS sold to Freddie Mac.