Financial 411: Unemployment Figures and More Wrangling Over StuyTown

It's WNYC's Financial 411, our take on the economic news of the day. The Labor Department's weekly release of new jobless claims found they passed the half-million mark -- for the first time since last November. That was enough to send markets downwards. The Dow dropped 144 points to close at 10,271 and the Nasdaq lost 36 points to end the day at 2,178.

Mortgage rates are also declining. Freddie Mac said the average rate for 30-year fixed loans fell this week to 4.42 percent. It's the eighth time in nine weeks that rates have fallen to a new low.

And the Congressional Budget Office has released its latest projections -- and they could take the wind out of anyone's sails. The CBO predicts the federal deficit will exceed $1.3 trillion this year. The nonpartisan agency also expects U.S. gross domestic product to grow by just 2 percent between the fourth quarter of 2010 and the same period next year.

Labor Department Releases Unemployment Figures

Local job figures are out today, showing that New York City's unemployment rate fell in July to 9.4 percent. The city also gained nearly 34,000 private sector jobs since last summer. WNYC's Lisa Chow has been looking at the numbers.

So how does this compare, the city's unemployment rate with the state's and the country's?

The state's is lower, it's at 8.2 percent, and the city is basically on par with the country, but this is the seventh month in a row that the city's unemployment rate has fallen. The peak was in December with an unemployment rate of 10.5 percent.

We've come a long way from there. Which sectors are thriving and which are hurting?

There have been some reports that the financial sector is hiring again, but at least according to these figures, from a year ago investment banking has shed about 9,000 jobs. That's about a 20 percent drop from a year ago, and securities brokerage firms have lost another 10,000 jobs. Local government took a big hit this year, losing something like 55,000 jobs, although the federal government in New York is hiring. And the sectors that are growing are health care, leisure and hospitality, and we're talking hotels and restaurants.

The Fight Over Stuyvesant Town and Peter Cooper Village

While buyers across the city are still showing some restraint, one piece of property is hot again. That's Stuyvesant Town and Peter Cooper Village on Manhattan's East Side. Owners Tishman Speyer and Black Rock Realty walked away from the sprawling middle-income complex in January, and now there's a fight over who will take it over. WNYC's Cindy Rodriguez explains what's happening.

Tishman Speyer and Black Rock Realty paid $5.4 billion for the property in 2006, during the peak of the housing market. That deal went sour when the owners weren't able to raise rents high enough to sustain their enormous debt load. Now it's estimated the property is worth less than $2 billion. What a fall from grace. Who wants this property and why?

Hedge fund manager William Ackman was the first to to try to seize the property. Ackman's Pershing Square Capital Management, along with a real estate developer, bought a portion of the outstanding debt -- $300 million -- at a very deep discount. The Ackman group believes that this gives them the right to foreclose on the property and take it over. Now their plan is to turn the rental complex into co-ops. Ackman wants to give the current renters a chance to purchase their own apartments, although it's unclear at what price that would be. And there is interest from tenants in owning their own apartments, but the question has always been, Would they be able to afford it or not? And those that can't afford it have said they want the option to stay in their rent-regulated apartments.

Ackman is fighting against other investors for the properties. What are the chances that he'll be able to win?

The senior lenders, CW Capital, which holds the $3 billion first mortgage, has sued to block the foreclosure. Now, they want to be paid, and they believe that if the Ackman group forecloses, they will try to avoid paying off this debt by filing for bankruptcy. A foreclosure auction had been scheduled for next week, but today a judge scheduled a hearing for September 2, and at that time both sides will get a chance to make their case.

What about the tenants' side, what have they said? Are any of them taking sides?

Daniel Garodnick, who is the city councilman that lives at Peter Cooper Village, and who advocates for the tenants, says the tenants had expected this sort of legal wrangling and they are prepared to basically back whoever is going to meet their demands. Garodnick says they've had conversations with both the senior lender, CW Capital, and the Ackman group. And they're sort of just waiting to see what happens.

So what is next, Cindy?
 
The next step will be this hearing on September 2, where this legal wrangling will continue, and we'll see who comes out on top, if Ackman is able to foreclose and take control of the property, or if CW Capital is successful at stopping them.