Government

Consumers kept their cash--and credit cards--in their wallets in July as personal spending rose just 0.1 percent, while income increased 0.2 percent, the Bureau of Economic Analysis reported Friday. Economists had expected income to grow 0.2 percent but thought spending would increase 0.3 percent.

FDIC-insured banks earned a record $42.2 billion in profits in the second quarter of this year, up 22.6 percent, or $7.8 billion, from $34.4 billion a year ago. The increase marks 16th month-in-a-row earnings rose year-over-year. Overall, 53.8 percent of the nearly 7,000 insured banks posted yearly increases in earnings. As profits rose, the list of problem banks shrunk to 533 compared to 612 a year ago. The tally for problem banks is also down significantly from the record high of 888.

Freddie Mac's weekly updated Primary Mortgage Market Survey shows the 30-year fixed-rate mortgage (FRM) averaging 4.51 percent (0.7 point) for the week ending August 29, down from 4.58 percent the prior week. A year ago at this time, the 30-year FRM averaged 3.59 percent. The 15-year FRM this week averaged 3.54 percent (0.7 point), down from 3.60 percent previously.

Shrugging off cutbacks in government spending, the nation’s economy grew in the second quarter at a faster pace than originally reported, the Bureau of Economic Analysis said Thursday. Second quarter growth was calculated at a seasonally adjusted annual 2.5 percent rate, a sharp increase from the 1.7 percent initially reported for gross domestic product (GDP), the broadest measure of the nation's economy, a month ago. The stronger growth suggests a recovery on track, though the growth rate is shy of the 3 percent trend rate, a threshold generally considered necessary to expand payrolls.

First-time claims for unemployment insurance for the week ending August 24 dipped 6,000 to 331,000, the Labor Department reported Thursday. Economists expected the number of claims to fall to 330,000 from the 336,000 originally reported for the week ended August 17. The number of filings for that week was bumped up to 337,000.

The first two phases of the recovery began in 2009 and 2012, respectively, according to Trulia's monthly Housing Barometer. The milestone marking the first phase was when sales and construction first started to pick up. The second phase began when home prices reached bottom and began to increase. The third phase began this spring after housing inventory bottomed out and both inventory and mortgage rates began to climb, according to Trulia. What we're waiting on now, according to Trulia, is the fourth phase, in which ""young adults finally start moving out of their parents' homes.""

Six federal agencies jointly released their proposed QRM rule that would require lenders to retain risk when selling mortgage-backed securities (MBS). The new proposal was created in consideration of the industry's response to the original proposal issued in 2011. That proposal required lenders to keep a stake in the loans they sold in which borrowers were spending more than 36 percent of their income on payments and in loans with down payments of less than 20 percent. Under the new proposal, the 36 percent income threshold has been raised to 43 percent, and the revised rule also eliminates the down payment requirement.

Known as the Servicer Total Achievement and Rewards, or STAR, the program was created to establish servicing standards and acknowledge Fannie Mae servicers that stand out for their performance, customer service, and foreclosure prevention efforts, according to a release. Servicers recognized for the first half of 2013 in peer group one were Green Tree Servicing, Nationstar Mortgage, Ocwen Financial, PHH Mortgage, PNC Financial Services Group, Seterus, and Wells Fargo. In peer group two, Fannie Mae gave a nod to Fifth Third Bank and Regions Bank.

As Detroit geared up for the kick-off of the Blight Elimination Program, Mary Miller, Treasury's undersecretary for domestic finance, offered words of encouragement attendees at the event Monday. The effort to do away with residential blight is the largest in Michigan's history, according to a release from the Michigan governor's office.

The FDIC's list of federally insured bank failures grew to 20 so far this year as two more banks collapsed. On Friday, FDIC announced the closures of Community South Bank (Parsons, Tennessee) and Sunrise Bank of Arizona (Phoenix).