The Rise of Income Inequality in the United States Part 3

Now that we’ve assessed how wealth inequality started and how to improve wealth and saving data, here are some ideas about how to further reduce wealth disparity:

The top 1% savings rate is much higher than both the next 9% and bottom 90% savings rates. One idea that is radical is to encourage long-run savings. The United States government could directly invest in these savings accounts so that they earn great rates of return. The other aspect of this plan would be to have interest in borrowing savings so as to encourage people not to borrow from their savings. Encouraging saving of the bottom 90% would reduce wealth disparity.

Other ideas to reduce wealth disparity include the following:

Increase progressive income taxation to decrease wealth disparity. Increase estate taxes in the United States to decrease inherited wealth Increase access to education and health benefits cost controls. Improve minimum wage policies. This will in effect shift power from shareholders to workers. Create better laws protecting consumers (such as predatory lending) and increase financial regulation to increase middle class wealth. Educate the bottom …

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Independent.ie mention Irish Mortgage Brokers

We were mentioned in the Independent today in a story relating to the Central Bank, it hinged upon the fact that they had a ‘whistleblower’ line for people wanting to report financial wrongdoing and it wasn’t operating correctly which means they couldn’t take a call.

The story quoted us as follows: Compliance officer with Irish Mortgage Brokers Karl Deeter said it was not good enough that the whistleblower phone line was not being answered and emails not getting a response.

“Imagine if you called 999 to report a crime and no one answered. What would you think of our police service?” he said. A Central Bank spokesman claimed the problem had been rectified after the situation was raised with it by the Irish Independent.

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Central Bank whistle-blower line unmanned

We were asked to comment on a finding by Charlie Weston in the Independent about the fact that the private disclosure (or ‘whistle-blower’) lines in the Central Bank don’t work. After the newspaper highlighted this they took action, but we were not impressed that this was only found out through the work of a journalist.

The comment we offered was very clear (below).

Compliance officer with Irish Mortgage Brokers Karl Deeter said it was not good enough that the whistleblower phone line was not being answered and emails not getting a response. “Imagine if you called 999 to report a crime and no-one answered. What would you think of our police service?”

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PRTB deposit scheme? Whatever… Here’s the way around it

It is only due to fairly unsatisfactory outcomes with the PRTB (such as massive delays in hearings, awarding damages that will never be recovered and the fact that they jacked up their prices while also only charging one party to the contract) that the idea of them running any further ‘scheme’ is of concern.

On that basis, and in speaking to landlords, many of them won’t take part, and there’s a simple reason for it, they don’t want to be part of a scheme that creates more administration and reduces the relationship to being further beholden to a third party.

So here’s the way around it: stop taking deposits.

That’s all there is to it, landlords should merely stop taking deposits and when they do there will be nothing to give to the PRTB because the deposit was never received so it cannot be passed on.

What you can do is demand first and last months rent up front. This means you don’t hold a deposit for any damage, but if the damage is significant a deposit won’t cover it …

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Newstalk have Irish Mortgage Brokers on to discuss Central Bank rules

We were speaking on Newstalk about Central Bank rules and the impact they are having on different parts of the market. Some of the notable moments are mentioned below:

Karl Deeter of Irish Mortgage Brokers & Advisors.ie noted that high mortgage deposits are forcing people to stay in rented accommodation and fueling the housing shortage.

Deeter said: “If you’ve got people who have to come up with an extra €20,000 and they’re looking to save that, they end up renting a house for much longer than they would have. But because of that what you’re seeing is that they’re staying in a certain sector where the supply isn’t coming on board.

“It’s driving up rents. That’s almost like an additional tax which makes savings harder. It doesn’t mean that house sales have stopped or the prices aren’t rising; they are but it’s just that people aren’t borrowing to do it”.

The full story is on the Newstalk website here.

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Newstalk: Lunchtime speaks to Irish Mortgage Brokers about ‘mortgage caps’

Jonathan Healy of Newstalk spoke to Karl Deeter about capping mortgage loan to values and loan to income amounts. This is a logically compelling idea but it won’t fix the supply shortage or necessarily prevent the problems we are told it will fix. It will also mean that about 2 in 3 first time buyers face an adverse effect that people who already bought didn’t have to deal with, namely that of trying to save up a 20% deposit.

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We have ceased to offer debt management services under the Central Bank regulations

Irish Mortgage Brokers have informed the Central Bank that we will not continue the debt management services industry under their regulation. This blog serves to notify people who may want to enquire with us that we are no longer authorised by the Central Bank (we can still offer insolvency solutions). No clients have been adversely affected and we are liaising with the Central Bank to ensure the termination goes smoothly.

Particular issues relate, in our view, to how the Central Bank has approached the regulation, the delays, repeated requests for identical information and specifically seeking management accounts when audited accounts were provided.

We also faced huge delays from the Central Bank in processing and responding to queries which they resolved by asking for more information rather than accepting blame (point above being one such example).

The efforts thus far seem to amount to seeking unrealistic demands from industry then only pulling back when they are shown to be operationally impossible. In the first ‘consultation’ the Central Bank suggested that a mediator hold indemnity for the entire quantum of debt they …

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Protection of Residential Mortgage Account Holders Bill 2014

Normally I expect a better outing from Fianna Fail – in particular where Michael McGrath is concerned. Their new bill for protecting mortgage account holders (aimed mainly at IBRC former Nationwide loan holders) is a banger.

It gets down to details in section 3 onwards. In section 4 it calls any buyer to ‘be bound by such Codes of Practice that govern residential mortgages that are in force at the time of the sale and/or transfer or are subsequently introduced by the Central Bank’. This is misinformation.

You can’t ‘opt in’ to regulation, something we already covered here, you are either regulated or not and mimicking best practice doesn’t mean anything as there is no binding force behind it.

In section 4.2 it states that ‘It shall be a precondition to the sale or transfer of residential mortgage loans by persons or entities who acquire, either by purchase or transfer, residential mortgage loans from financial institutions regulated by the Central Bank to other persons or entities …

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