RJ and Makay

A recent inquiry by Senators Carl Levin and Tom Coburn has yielded 19 recommendations to deal with high-risk lending, regulatory failures, inflated credit ratings, and investment bank abuses. The recommendations, published on April 13, are as follows.

High risk lending:

1. Ensure "Qualified Mortgages" Are Low Risk - Federal regulators should use their regulatory authority to ensure that all mortgages deemed to be "qualified residential mortgages" have a low risk of delinquency or default.
2. Require Meaningful Risk Retention - Federal regulators should issue a strong risk retention requirement under Section 941 by requiring the retention of not less than a 5% credit risk in each, or a representative sample of, an asset backed securitization's tranches, and by barring a hedging offset for a reasonable but limited period of time.

3. Safeguard Against High Risk Products - Federal banking regulators should safeguard taxpayer dollars by requiring banks with high risk structured finance products, including complex products with little or no reliable performance data, to meet conservative loss reserve, liquidity, and capital requirements.

While overall unemployment fell to 8.8% in March, the job situation in the financial sector had mixed results. Bureau of Labor Statistics (BLS) data for the "financial activities supersector," which consists of the Finance and Insurance sector and the Real Estate, Rental, and Leasing sector, show that unemployment in the supersector climbed from 6.9% in February to 7.1% in March.

In number terms, the supersector did add 6,000 jobs in March, though, improving slightly over the last two consecutive months of job losses. At 7,610,000, however, the number of employees in the supersector is still 741,000 shy of its December 2006 peak of 8,351,000 and lower than the headcount at anytime from 2001 through 2010. The supersector's unemployment rate is still more than triple the low of 2.1% it achieved in December 2005.

When doing retirement planning, almost half of retirees — 45% — don't account for the effects of inflation on their spending power, show the results of a survey released by the Society of Actuaries (SOA). That finding is worrisome because it suggests many retirees may run out of money faster than they thought.

The SOA survey, which included 804 adults ages 45 to 80, also showed that inflation is a much larger concern among pre-retirees, 72% of whom said their retirement plans contain an inflation assumption. Similarly, 71% were very or somewhat concerned about inflation, compared with 58% of retirees.