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It's WNYC's Financial 411, our take on the economic news of the day. A general sense of gloom about the economy pushed stocks down today, despite some mergers and acquisitions news. The Dow gave up almost 40 points, closing at 10,174. The Nasdaq lost about one percent, the S&P 500 about half a percent.

AIG, the insurance giant that needed a gigantic bailout two years ago to avoid collapse, is making some progress in paying taxpayers back. The company has cut the government a check for $4 billion, bringing the total amount repaid to just under $100 billion. The government had provided AIG $182 billion after its financial products unit imploded.

The owners of the Empire State Building say a proposed tower three blocks away would alter the city's skyline too much. They're trying to convince the City Council to block a proposal for a new 1,200-foot skyscraper less than four blocks away. But a spokesman for the builder, the Vornado Realty Trust, told council members that skyline has never stopped changing and he hopes it never will.

Finally, the rental market appears to be recovering in Manhattan. CitiHabitats, a real estate brokerage, reports vacancy rates in July were below one percent for the third consecutive month, and rents are rising again.

New Credit Card Rules Go Into Effect

New credit card rules went into effect this Sunday that limit the penalties banks can charge for late payments or if you go over your credit limit.  These regulations are the last in a series of changes to how the credit card industry can set interest rates and charge fees.

Adam Levin, chairman and co-founder of Credit.com, explains:

Adam, walk us through these latest rules.

The newest phase that just went into effect yesterday basically focuses on fees, with some emphasis on rates. Fees have to now be reasonable and proportional to the violation or the omission. Penalty fees can't be more than $25, as opposed to $39, and they can't be more than whatever it is they were designed to correct. So for instance, if you are late on a minimum payment of $15, they can't charge you $39. They have to charge you no more than $15. And if you had a Happy Meal that put you over the limit -- assuming you opted in to an over-limit program -- and let's say $2 of the Happy Meal put you over, then they have to restrict their over-limit fee to whatever that number was. So that's very important, that's bringing perspective to all of this.

How have credit card companies responded to changes like that? The Wall Street Journal reported this morning that interest rates are up. Are they, and is this a result of new rules?

I think they're up. I think it's part of a process. They were front-running the regulations before that, when they were raising rates like mad. And then once the regulations went into effect and began to kind of restrict their maneuvering room, combined with the fact that banks were closing accounts and lowering credit limits so consumers were then forced to look for other credit cards -- where they might have an opportunity -- they were faced with new credit cards where the new rates were higher because banks couldn't just instantly turn around and raise rates on existing balances, as well as credit limits that were lower. So consumers had to kind of look for things, and as a result of that, rates went up, and banks continue to raise fees and rates because they've got to make up the revenue that they're losing from the restrictions.

The State of the Housing Market

This week, we'll get a better sense about how the real estate market is doing as we get sales data for the month of July. And the forecast is looking pretty grim as economists expect a sharp drop in sales. Pat Lashinsky, CEO of Zip Realty, an online real estate brokerage, talks about the state of the housing market.
 
What is your forecast for home sales?

I think that the results that are going to come out for July and probably for August are going to show pretty significant year-over-year declines. They're going to show the housing market is getting in worse shape rather than better, buyers who are really taking their time and feel no sense of urgency to buy right now, which is difficult in a time where we've got foreclosures and distressed properties, so we've got more inventory coming on the market, and we just don't have the buyers there to absorb them right now.  

To help encourage sales, the federal government has offered tax credits for buyers twice in the last year, but the housing market has yet to have a sustained recovery. Why is that?  
I think that when you look at the tax credits you'll see that during the time of both those tax credits, during those last couple of months, we did see solid increases and we did see solid gains. The question is whether that was just pulling volume forward, which seems to be the case at this point. The real problem is that we haven't figured out a way, economically, to get people who currently have jobs to be able to get the financing they need due to increased down payment requirements, and because the economy is just right now in a struggling place with unemployment so high, and we need more of those families able to buy homes to get the housing market going up.

There has been a growing worry about the economy recovery slowing down.  If the housing market is still weak, how will that affect the recovery?

I think that most people think that housing and unemployment are the two most important elements to get going, and if housing isn't moving forward then we're putting a lot of pressure on getting employment fixed to move the economy up.