The Federal Reserve fined five large US banks a combined $35.1 million to settle cases of mortgage servicing flaws dating back to 2011. The central bank announced the fines against Goldman Sachs, Morgan Stanley, CIT Group, US Bancorp, and PNC Financial as part of a broader effort to terminate enforcement actions begun in 2011 and 2012 against large banks for mortgage servicing shortcomings. Ally Financial, Bank of America, HSBC North America Holdings, JPMorgan Chase and SunTrust Banks had already paid penalties for similar issues. All 10 banks had enforcement actions under the Fed ended on Friday, as the regulator cited “sustainable improvements” in their servicing practices. Goldman is set to pay the largest fine of the five announced today, totalling $14 million. Morgan Stanley agreed to pay $8 million, CIT will pay $5.2 million, US Bancorp will pay $4.4 million, and PNC will pay $3.5 million. All told, the Fed said it had assessed $1.1 billion in fines against 14 banks for mortgage servicing shortcomings, which became widely known in the wake of the 2007-2009 financial crisis as more homeowners struggled to stay current on their loans. At the same time, the Fed announced it was terminating enforcement actions against a pair of mortgage servicers. Lender Processing Services, Inc., succeeded by ServiceLink Holdings LLC, and MERSCORP Holdings, Inc., formerly known as MERSCORP, Inc., both faced enforcement actions from financial regulators for issues tied to foreclosure-related services. In a separate enforcement action, the Fed announced it had fined Goldman Sachs $90,000 for violations tied to the National Flood Insurance Act.
Oil hovers below $70 highs, clouded by rise in US output
Oil hovered near a three-year high of $70 a barrel on Monday on signs that production cuts by OPEC and Russia are tightening supplies, but analysts warned of “red flags” due to surging US production. International benchmark Brent crude futures were trading 3 cents lower at $69.84 by 1522 GMT, having risen above $70 earlier in the session. US West Texas Intermediate (WTI) crude futures were up 22 cents at $64.52 a barrel. Trading was relatively slow due to a national holiday in the United States. A production-cutting pact between the Organization of the Petroleum Exporting Countries, Russia and other producers has given a strong tailwind to oil prices, with both benchmarks last week hitting levels not seen since December 2014. Growing signs of a tightening market after a three-year rout have bolstered confidence among traders and analysts that prices can be sustained near current levels. Bank of America Merrill Lynch on Monday raised its 2018 Brent price forecast to $64 a barrel from $56, forecasting a deficit of 430,000 barrels per day (bpd) in oil production compared to demand this year. Other factors, including political risk, have also supported crude. “Tighter fundamentals are (the) main driver to the rally in prices, but geopolitical risk and currency moves along with speculative money in tandem have exacerbated the move,” US bank JPMorgan said in a note.
Olick – By all measures, a construction boom is shaping up for 2018
– The construction industry added 30,000 jobs last month, according to the Labor Department.
– That brings the sector’s 2017 gains to 210,000 positions, a 35% increase over the previous year.
– Construction spending is also soaring, up to a record $1.257 trillion in November, according to the Commerce Department.
– Optimism among construction contractors is also at a record high.
All signs and numbers point to a huge year for the construction industry. Even in December, with much of the nation frozen, the construction industry added 30,000 jobs, according to the Bureau of Labor Statistics. For all of 2017, construction added 210,000 jobs, a 35% increase over 2016. Construction spending is also soaring, rising more than expected in November to a record $1.257 trillion, according to the Commerce Department. That was up 2.4% annually. Spending increased across all sectors of real estate, commercial and residential, with particular strength in private construction projects. The only weakness was in government construction spending. Construction firms are clearly looking to hire more workers. Three-quarters of them said they plan to increase payrolls in 2018, according to a new survey from the Associated General Contractors of America. Industry optimism for all types of construction, measured by the ratio of those who expected the market to expand versus those who expected it to contract, hit a record high. “This optimism is likely based on current economic conditions, an increasingly business-friendly regulatory environment and expectations the Trump administration will boost infrastructure investments,” said Stephen Sandherr, the association’s CEO.
Contractors are most optimistic about construction in the office market, which has seen little action since the recession. Transportation, retail, warehouse and lodging were also strong in the survey. Respondents were less encouraged by the multifamily apartment sector, which is just coming off a building boom. The biggest concern for the industry is the severe shortage of labor. This is slowing what could be a far more robust recovery in the residential housing market, which desperately needs more homes. December’s employment report did show the biggest monthly rise in residential construction jobs of 2017, but homebuilders are still looking for skilled labor. Housing starts are increasing slowly, but they are not even close to meeting the strong demand. Construction firms are adding jobs, but workers are also leaving the industry, aging out. In 2017, a net 190,000 new workers entered the construction industry, far lower than the prior three-year average of 284,000 annual additions. The National Association of Realtors, which is essentially begging builders for more homes, points to this as a huge problem and is appealing to Congress for new policies to ease the worker shortage. “There needs to be serious consideration in allowing temporary work visas until American trade schools can adequately crank out much needed, domestic skilled construction workers,” NAR chief economist Lawrence Yun wrote in response to the monthly employment report.
Minimum wage hikes sending restaurants the way of the shopping mall?
Eighteen states raised their minimum wages at the start of 2018, but increasing labor costs are strangling the dining industry so much that restaurants could soon face the same fate as shopping malls. “I think you’re going to see thousands of restaurants close their doors,” Willie Degel, “Restaurant Stakeout” host and CEO of Uncle Jack’s Steakhouse, told FOX Business. “Fine dining is going to go by the wayside.” The downward cycle seems daunting to Degel and other industry insiders. As costs rise, only so much of the burden can be passed along to consumers in the form of price hikes before they decide they cannot afford the expense. “When we increase in prices … we see guest count go down,” Degel noted. “The consumer is not willing to pay for the experience then.” Michael Mabry, president of MOOYAH Burgers, Fries & Shakes, said that throughout recent years he also turned to price increases in order to balance out swelling costs. However, at the first opportunity, he brought menu prices back down by 10%. In addition to raising prices, businesses often cope with minimum wage increases by firing staff. Last week, casual dining chain Red Robin Gourmet Burgers (RRGB) announced it would eliminate busboy positions at 570 restaurant locations. Degel said he got rid of busboys at his New York restaurants two years ago, and has more recently turned to staff cuts “across the board.” “I can’t fire any other people or I can’t even do my business,” he said.
Many business owners have turned to technology to both compensate for the loss of labor and to reduce expenses. Some restaurants, including Chili’s and Applebee’s, have already replaced servers with tableside tablets for placing orders and paying bills. But technology has had another effect. Services like GrubHub (GRUB) are beginning to change the nature of the dining experience for consumers, who can enjoy a meal from their favorite restaurants without ever having to step foot inside. Similar to the way e-commerce triggered a shift in the retail industry, mobile orders and delivery could deepen existing trends for restaurateurs by transforming the traditional, in-house meal. Who suffers from these trends? One answer is low-skilled and entry-level workers, who are often the first layer of staff cut when profits run thin or new technologies are introduced. “I think it’s a real problem for people with low educational attainment and a low basic skills base,” Iain Murray, vice president for strategy at the Competitive Enterprise Institute, told FOX Business. “That sets you in a trend whereby it’s very difficult … to gain the extra skills to [get] a job even at minimum wage. That sets you in for long-term unemployment.” Michael Saltsman, director of the Employment Policies Institute (EPI), said that his first job at age 15 was working as a busboy, where he had “no particular skills” but the business took a “chance” on him. “[It is] drilling down to people who are young, who aren’t enrolled in school … [a demographic with] unemployment rates that are three to four times the overall [national] unemployment rate,” he said