President Barack Obama has named Wall Street critic Elizabeth Warren his special adviser and tasked her with setting up the new Consumer Financial Protection Bureau, which will look out for consumers in their dealings with banks, mortgage companies and other financial institutions. "She was the architect behind the idea for a consumer watchdog, so it only makes sense that she should be the architect working with Secretary of Treasury Geithner in standing up the agency," he said. The 61-year-old Harvard professor can assume her duties immediately. The appointment means Warren avoids a lengthy confirmation battle in the Senate.
Americans' long journey to regain the wealth they lost in the recession is stalled. Net worth -- the value of assets like homes and investments, minus debts like mortgages and credit cards -- fell 2.7 percent last quarter, to $53.5 trillion, according to the Federal Reserve. Meanwhile consumer prices posted a moderate 0.3 percent increase in August, reflecting a big jump in gasoline prices. If you factor out energy and food, prices were flat.
In trading today, stocks seesawed, the Dow ended the day up 13 points, closing at 10,608. Over the week, the index added almost 150 points, a gain of more than one percent. The Nasdaq rose about a half a percent today, the S&P 500 was flat.
This Week's Business News
This week Republican and Democratic voters chose their candidates for higher office in Albany. A plan to offer the co-op option to Stuyvesant Town renters was rejected. And a lawsuit against Goldman Sachs revived that age old question -- is Wall Street a hostile work environment for women?
Greg David, director of the Business & Economics Reporting program at the CUNY Graduate School of Journalism, reviews this week's business and economic news.
On Tuesday, Republican primary voters chose Buffalo businessman Carl Paladino to be their nominee for Governor, rather than Rick Lazio, the former Congressman and banker. Palladino presents himself as a fire-breathing outsider -- he wants to take a bat to Albany. How do his economic plans compare with the Republican mainstream in this state?
It's interesting you say the Republican mainstream. That's hard to define. When Joe Bruno was head of the Republicans in the state Senate, that meant yes, we favored some tax cuts, but we were happy to deal with unions and trial lawyers. Not sure there is an ideology. Paladino does represent the Tea Party ideology, the cut spending, or, as you said, and he says all the time, take a bat to Albany.
How do you think this will go over statewide?
That's an interesting question. Down here in New York, he's being dismissed as crazy, which is what the Democrats call him. I don't think he's being dismissed that way upstate, where there's a lot of anger about the situation. I think he's going to galvanize upstate in a way that hasn't been done before. But remember, the most interesting part of this election campaign is that on policies, there's very little difference between Paladino and Cuomo.
Andrew Cuomo says no tax increases. Andrew Cuomo says we have to cut the size of state government dramatically. Andrew Cuomo says we must reform Albany, he says we must cut education, spending, we must cut healthcare spending. Andrew Cuomo wants to cap property taxes to increase each year at two percent. It's really bad news for people who have government jobs.
And it's interesting. He was finally endorsed on the labor union-oriented Working Families Party line, a few days ago they did this, although a little bit tepidly.
How about kicking and screaming? You know he said I'm not accepting your nomination unless you accept my platform, which of course they don't like. They're the ones who want tax increases all the time. It's a very interesting development. You know in New York, to keep a ballot line you have to get 50,000 votes. The Working Families Party decided they couldn't get 50,000 votes without him, now they're stuck. The question is, are they really in January, if Cuomo's elected, going to go along with all this? Good question.
The other question could be is Andrew Cuomo really going to go through with all these things he says he's going to go through with?
Amy, everybody asks me that question when I write pro-Cuomo stuff. Here's what I think. I think he is sincere, I think he's taken a look at the state and he is sincere. And even if he's not sincere, he can't walk away from the promises he's made.
Also this week, a judge rejected a plan proposed by hedge fund manager William Ackman for the future of Stuyvesant Town and Peter Cooper Village. Ackman, who owns some of the debt on the buildings, wanted to give tenants in the rent-regulated apartments there the option to buy their apartments. What happens, now that that proposal has been nixed?
Well, it may just be delayed. Here's what happened. Ackman wanted to get rid of the mortgage holders, and not pay them as much so he could pull off this plan. The people who own the first $3 billion mortgage are in charge, they'll try to sell it, probably to someone who will come back with a similar plan.
Lastly, three former employees filed suit against Goldman Sachs. They allege a pattern of bias in pay and promotion. The three plaintiffs are all women. Tell me about their case.
Well, you know, here's the numbers they have that tell everything. Twenty-nine percent of Goldman's vice presidents are women, 17 percent of managing directors, 14 percent of partners, one person on the executive committee. What does that tell you? This is a constant complaint, that women on Wall Street don't get a fair shake. It's come back. Goldman says it did nothing wrong, other firms have settled, Morgan Stanley in 2004 for $54 million. You know, Wall Street's a lot better than it was, I'm not sure it's great for women.
Do you think these complaints increase when jobs are scarce?
We know age discrimination complaints increase in times of recession. I'm not sure that these kinds of complaints do, and actually much of the evidence in the case is from years ago.