Financial 411

WNYC’s Amy Eddings hosts a daily overview of financial news at 4:30 each weekday. This financial wrap delivers highlights of the day’s business news delivered by WNYC’s reporters with context, clarity and a New York perspective.

The Fed Names Names

The Federal Reserve has named names. As required under the Dodd-Frank financial reform bill, the Fed released details about the banks that accessed more than $3 trillion in emergency aid during the financial crisis. They include Bank of America, Citigroup, Goldman Sachs and J.P. Morgan. They were just a few of the financial institutions cited in the more than 21,000 transactions. The nation’s central bank created eight lending programs to stabilize the financial industry. Many of the programs have now ended.

The Federal Reserve also issued its regular survey of the nation’s economy and finds the economy continues to improve. The beige book report said consumer spending has been solid, and retailers expect decent sales this holiday. In the New York region, the job market is picking up, and so is tourism. Hotels in Manhattan were 90 percent full in October, and November’s looking better than a year ago as well. Stepping back again to take a national look, the only exception to the generally positive news in the Fed’s report was the housing sector. Sales and prices have yet to recover nationwide.

The Housing Market in New York City

Here in New York City, the housing situation depends on the borough you live in. Queens trails the other boroughs when it comes to the recovery. Prices are down 30 percent from their peak. On the other hand, prices in Manhattan have rebounded strongly.

WNYC’s Lisa Chow reports on the new city data compiled by New York University’s Furman Center:

On the whole, New York City housing prices were flat this summer, compared to a year ago, and they’re still off more than 20 percent from the peak. The only borough to see a double digit climb in prices this summer from a year ago was Manhattan, where prices rose about 11 percent. On the other hand, homeowners in Queens continue to suffer. Prices there fell about 9 percent from last summer. But they’re falling a lot less rapidly than before — a sign prices could stabilize soon. Overall, the number of home sales in the city was up, and once again, Manhattan saw the biggest jump — at about 25 percent.

End of Federal Stimulus Poses Challenges for State Finances

While the Federal Reserve report found that the private sector is improving, that’s not true for states. The semi-annual report released today from state budget officers and the National Governors’ Association forecasts state governments will spend more next year, after two years of cutting services, and in some cases, government workers. But that spending will be nearly seven percent less compared to 2008 levels. And even as states bring in more revenues — thanks in part to higher taxes — the end of federal stimulus dollars will only pose further fiscal challenges, especially for New York and New Jersey.

Scott Pattison is the executive director of the National Association of State Budget Officers:

New York and New Jersey are going to have a very difficult fiscal period for at least two or three years. They are going to have to focus on dealing with a situation in which the federal funds are ending from the stimulus. They have certain liabilities, for example New Jersey, the pension liability issue that will have to eventually be addressed. I would expect that those two states and that general region is going to be like a lot of the rest of the nation, they’re going to have a very tight state fiscal situation for several years, and unfortunately, as a result, they’re going to have to make some very tough and painful political decisions on how to balance the budget.

Federal Commission Releases Deficit-Reduction Plan

As states struggle to balance their annual budgets, the federal government is only in the proposal stage, when it considers reducing its nearly $14 trillion debt. Calling the report, The Moment of Truth, the National Commission on Fiscal Responsibility officially released its proposals to cut the national debt. The general scope of the recommendations have been known for several weeks, and include proposals to cut domestic and military spending, overhaul the nation’s tax code and change significant portions of Social Security. The 18 members of the commission are to vote by Friday. Whether Congress votes on the proposals is another matter. David Leonhardt, economics columnist for The New York Times. spoke to WNYC’s Brian Lehrer:

We’re at the point in which neither the Democrats nor the Republicans have a plan they’re willing to actually get behind because neither one of them is willing to be in favor of the level of either spending cuts, or tax increases, or both, that would deal with the deficit because basically the electorate isn’t willing — yet — to reward people who are going to be specific about this.  

NYC OTB Board Votes to Dissolve

It only feels like Groundhog Day. Once again, the board of the New York City Off Track Betting Corporation has voted to dissolve NYC OTB. Board member David Cornstein blamed the state senate for failing to pass a rescue package when it was in special session on Monday. He said OTB’s employees stand to lose the most. A thousand good, hard-working employees be thrown out in the streets in this economy, he said. It breaks my heart to see that happen.

Barring last minute action by the senate, betting parlors will close their doors for the last time on Friday. Senators said they needed more time to study the rescue plan before voting on it.

NYC OTB takes in over a billion dollars a year. But its complex revenue-sharing formula means it actually runs a deficit.

Stocks soared on this first day of December, erasing two weeks of losses after several reports today indicated the U.S. economy is recovering. The Dow Jones gained 250 points, ending the day at 11,256. The S&P 500 gained 19 points, to close at 1,206. The Nasdaq gained 51 points, to close at 2,549.