Current Events in July 2015

For most college students, parents are a major partner. They help shape college choices, career paths, and are likely to help foot the education bill. So what parents have to say about the process matters.

A survey of parents by HSBC finds that parents are growing more pessimistic about higher education. Nearly three quarters of those surveyed – 71% – now believe higher education is unaffordable for the majority of Americans.

At the same time, almost two thirds – 60% – consider a college degree to be essential in enabling their children to achieve important lifetime goals.

No doubt skyrocketing tuition costs have fueled parental pessimism. The cost of a college education has risen many times faster than the rate of inflation over the last few decades.

Some critics of higher education have blamed the increased availability of student loans and financial aid, and a new report from the New York Federal Reserve Bank lends some ammunition to that argument.

Higher tuition and loan demand

“When students fund their education through loans, changes in student borrowing and tuition are interlinked,” the report concludes. “Higher tuition costs raise loan demand, but loan supply also affects equilibrium tuition costs—for example, by relaxing students’ funding constraints.”

The authors said they found colleges and universities more exposed to changes in the subsidized federal loan program increased their tuition disproportionately around these policy changes, with a sizable pass-through effect on tuition of about 65%.

“We also find that Pell Grant aid and the unsubsidized federal loan program have pass-through effects on tuition, although these are economically and statistically not as strong,” they wrote.

The analysis found that the subsidized loan effect on tuition is most pronounced for expensive, private institutions that “are somewhat, but not among the most, selective.”

Housing bubble parallels

The Fed report explores an interesting parallel between the rising cost of college tuition and the rapid increase in home prices during the housing bubble. It examines the argument that one big reason home prices escalated so quickly is because so many consumers had access to so much credit they were able to bid up prices beyond what was justified.

While noting there is little empirical evidence linking credit availability and rising tuition, the report notes that the two events occurred at about the same time.

“Yearly student loan originations grew from $53 billion to $120 billion between 2001 and 2012, with about 90% of originations in recent years occurring through federal student aid programs,” the authors write. “Against this backdrop of increased borrowing, average sticker tuition rose 46% in constant 2012 dollars between 2001 and 2012, from $6,950 to $10,200, resembling the twin house price and mortgage balance booms.”

Parents, meanwhile, are squeezed between daunting costs and the desire to see their children succeed. The HSBC survey suggests they will continue to go into debt to reach that goal. And the debt may spread across two generations.

Sixty-five percent of parents with children under the age of 5 expect that their children will personally contribute toward their own tuition, and 59% admit their child will need to take on debt in order to do that. Around 3 in 10 – 29% -- of parents surveyed whose children are yet to begin their college education anticipate that grandparents will also share the financial burden.  

In calculations that included an adjustment for the Independence Day holiday, mortgage applications decreased 1.9% percent in the week ending July 10, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.

At the same time, the Refinance Index was up 4%, raising the refinance share of mortgage activity to 50.8% of total applications from 48.0% the previous week. The adjustable-rate mortgage (ARM) share of activity rose to 7.4%.

The FHA share of total applications inched up to 13.8% from 13.7%, the VA share was unchanged at 10.8%, as was the USDA share at 0.9%.

Contract interest rates

• The average contract interest rate for 30-year fixed-rate mortgages (FRMs) with conforming loan balances ($417,000 or less) was unchanged at 4.23%, with points increasing to 0.39 from 0.37 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs with jumbo loan balances (greater than $417,000) edged up 2 basis points -- from 4.18% to 4.20%, with points decreasing to 0.28 from 0.30 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 30-year FRMs backed by the FHA rose to 4.02% from 4.01%, with points increasing to 0.26 from 0.18 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 15-year FRMs was up 2 basis points to 3.43%, with points increasing to 0.33 from 0.31 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
• The average contract interest rate for 5/1 ARMs jumped to 3.13% from 3.03%, with points increasing to 0.42 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.

The survey covers over 75% of all U.S. retail residential mortgage applications.

Producer prices for final demand (PPI), the cost of goods and services one step shy of the consumer level, were up in June for the second month in a row.

Led primarily by surging energy costs, the PPI rose 0.3% last month on top of the May increase of 0.5%, according to the Labor Department (DOL).

Almost two-thirds of the June increase is the result of a 0.7% increase in the cost of goods. Services prices rose 0.3%

Goods and services

The 0.7% gain in the cost of goods was the result of a 2.4% surge in energy prices. Within that category, the cost of gasoline was up 4.3%. Food prices were up 0.6%, with the cost of eggs higher, and fresh and dry vegetables lower.

Thirty percent of the 0.3% gain in services costs last month can be attributed to prices for loan services, which climbed 2.4%. Prices for machinery and equipment wholesaling, fuels and lubricants retailing, truck transportation of freight, deposit services and portfolio management also advanced. Margins for food and alcohol wholesaling were down 3.7%.

The core PPI, which excludes the volatile food, energy and trade services categories,rose 0.3% in June after edging down 0.1% the month before. For the 12 months ended in June, core PPI was up 0.7%

The complete PPI report is available on the DOL website.  

Subaru of America is recalling 32,400 2012 model year Subaru Impreza 4-Door and Station Wagon vehicles (except WRX/STI models) manufactured April 21, 2011, to February 16, 2012.

The Occupant Detection System (ODS) may deactivate if a front seat passenger operates a device that is plugged into the power outlet such as a music player or cell phone, or touches a metal part of the vehicle such as the forward/rearward seat adjuster lever.

If the ODS deactivates, the front passenger air bag will be turned off and the front passenger air bag will not deploy in the event of a crash, increasing the risk of injury to the seat occupant.

Subaru will notify owners, and dealers will replace the Occupant Control Unit with a modified one, free of charge. The manufacturer has not yet provided a notification schedule.

Owners may contact Subaru customer service at 1-800-782-2783. Subaru's number for this recall is WQT-55.

Honda is recalling 106,439 model year 2014-2015 Acura MDX and MDX AWD vehicles manufactured April 23,2013, to December 16, 2014.

The vehicles' air conditioning compressor clutch drive bolts may not have received the proper anti-corrosion coating. If a bolt was not coated, it may corrode and break, allowing the compressor clutch plate may separate from the vehicle, possibly becoming a road hazard.

Honda will notify owners, and dealers will replace the air conditioning compressor clutch drive bolt and install a new clutch plate if necessary, free of charge. The recall is expected to begin July 31, 2015.

Owners may contact Acura client relations at 1-800-382-2238. Honda's number for this recall is JQ7.

Toyota Motor Sales USA is recalling approximately 109,000 Model Year 2012-2014 Prius v hybrid.

The software settings for the motor/generator control ECU and hybrid control ECU could result in overheating in certain transistors, potentially causing them to become damaged. If this happens, various warning lights will illuminate and the vehicle can enter a failsafe mode. In rare circumstances, the hybrid system might shut down while the vehicle is being driven, resulting in the loss of power and the vehicle coming to a stop.

Owners of the recalled vehicles will be notified by mail.

Toyota dealers will update the software for both the motor/generator control ECU and hybrid control ECU.

Owners may contact Toyota customer service at 1-800-331-4331.  

Hot on the heels of recalls of millions of cars equipped with Takata airbags, the National Highway Transportation Safety Administration (NHTSA) has begun an investigation of another brand of airbag component that may have a similar defect.

NHTSA's Office of Defects Investigation (ODI) reports it received a complaint back in 2009 involving a driver's side airbag in a 2002 Chrysler Town and Country minivan. The inflator reportedly ruptured, spraying bits of metal into the cabin.

ODI said it searched for similar incidents but found none. Fast forward to last month, as recalls of cars equipped with Takata airbags piled up.

KIA target of suit

In June, Korean automaker KIA notified ODI that it was a target of a lawsuit claiming that the inflator in the driver's side airbag in a 2004 Optima had ruptured. ODI said it went back to the 2009 report and found the inflators in the airbags in both the Town and Country and the Optima were manufactured by ARC Automotive.

The inflator in both airbags was a hybrid design that relies on two different sources of energy. The inflator fills the air bag cushion by releasing an inert gas stored in the inflator at high pressure. This gas mixture is augmented by an ammonium nitrate based propellant.

“Preliminary analysis indicates that the exhaust path for the inflation gas mixture may have been blocked by an object of indeterminate origin,” ODI said in a document filing. “This blockage appears to have caused high internal pressure and subsequent rupture of the inflator assembly.”

Only two reports

ODI said that as far as it knows, the two incidents – one in Ohio and one in New Mexico – are the only ones to have been reported. It also says the root cause of the rupture is not known.

ODI said it is opening the investigation to collect the facts and learn if there is a widespread flaw in inflators. It says there are approximately 420,000 2002 Chrysler Town and Country vehicles on the road and 70,000 2004 KIA Optimas.

Japanese manufacturer Takata has recalled more than 40 million vehicles in the U.S. because of exploding airbag inflators. The pieces of metal blasted into passenger compartments are blamed for more than 100 injuries and eight deaths.

The Takata-related recall drama has played out throughout 2015. The problem first came to light late last year, but from the start NHTSA found the manufacturer's cooperation lacking. In February it leveled a $14,000 a day fine against the firm until it provided additional documentation.

It was not until May, under intense prodding from NHTSA, that Takata ordered the first recall.

Honda will pay $24 million to resolve charges that its finance arm charged higher interest rates to minority car buyers. But dealers groups say the agreement will "hamstring the ability of thousands of consumers to negotiate lower interest rates with their local auto dealership.”

The Consumer Financial Protection Bureau (CFPB) and the U.S. Justice Department charged that Honda’s past practices resulted in thousands of African-American, Hispanic, and Asian and Pacific Islander borrowers paying higher interest rates than white borrowers, without regard to their creditworthiness.

As part of today’s order, Honda will change its pricing and compensation system to substantially reduce dealer discretion and minimize the risks of discrimination.

Fair marketplace

“The CFPB is committed to creating a fair marketplace for all consumers, and other auto lenders should take note of today’s action,” said CFPB Director Richard Cordray. “Honda’s proactive decision to move to a new pricing and compensation system demonstrates industry leadership and represents a significant step towards protecting consumers from discrimination.”

Dealers disagree. “This enforcement action artificially constrains the right of consumers to benefit from interest rate reductions of up to 1% of the APR on their next auto loan,” said Bill Fox, chairman of the National Automobile Dealers Association (NADA). 

But the head of DOJ’s Civil Rights Division, Principal Deputy Assistant Attorney General Vanita Gupta, said Honda's new system "balances fair compensation for dealers and fair lending for consumers" and said she hopes today's action "will spur the rest of the industry to constrain dealer markup to address discriminatory pricing.”

That's not likely. NADA and other dealers groups have been lobbying Congress to rein in CFPB's attempts to more tightly regulate dealer financing of car purchases.

Big business

Auto loans are the third-largest source of outstanding household debt in the United States, after mortgages and student loans. When consumers finance automobile purchases from an auto dealership, the dealer often facilitates indirect financing through a third-party lender like Honda, one of the largest indirect auto lenders in the United States.

As an indirect auto lender, Honda sets a risk-based interest rate, or “buy rate,” that it conveys to auto dealers. Honda then allows auto dealers to charge a higher interest rate when they finalize the deal with the consumer. This is typically called “dealer markup.”

Markups can generate compensation for dealers while giving them the discretion to charge consumers different rates regardless of consumer creditworthiness. Honda permitted dealers to mark-up consumers’ interest rates as much as 2.25 percent for contracts with terms of 5 years or less, and 2 percent for contracts with longer terms.

Today’s enforcement action is the result of a joint CFPB and DOJ investigation that began in April 2013. The agencies concluded that Honda's policies:

• Resulted in minority borrowers paying higher dealer markups: Honda violated the Equal Credit Opportunity Act by charging African-American, Hispanic, and Asian and Pacific Islander borrowers higher dealer markups for their auto loans than non-Hispanic white borrowers. These markups were without regard to the creditworthiness of the borrowers.
• Injured thousands of minority borrowers: Honda’s discriminatory pricing and compensation structure meant thousands of minority borrowers from January 2011 through July 14, 2015 paid, on average, from $150 to over $250 more for their auto loans.

To hear dealers tell it, CFPB's action will increase the price consumers pay.

“There’s no getting around the fact that this enforcement action is going to reduce the savings consumers depend on when financing a new vehicle,” said Brad Hoffman, chairman of AIADA, which represents imported car dealers. “Everyone in our industry is mystified as to why the government continues to overlook its own common-sense approach in favor of the anti-consumer methods forced on Honda Finance.”

The agreement announced Tuesday between six world powers and Iran, to slow that country's nuclear program, will result in the lifting of economic sanctions against Iran that have been in place for years.

Among other things, that means Iran can start exporting its oil again. When it does, it will find very different market conditions.

The last time Iran sold oil, it was a seller's market. Today, it's a buyer's market.

Iran's oil ministry has promised it can quickly ramp up to 1 million barrels of oil a day on the world market, but with an existing oil glut from over production and consistent declines in worldwide consumption, it will make much less per barrel than it once did.

Immediate price drop

With the announcement of an Iranian deal, the price of crude oil dropped more than 1.5% to $51.32 a barrel. Before the sanctions, Iran was getting around $100 a barrel.

“Iran’s efforts to raise oil exports could not have come at a worse time, given the market’s lingering oversupply,” Michael Cohen, an energy analyst at Barclays, told The Wall Street Journal.

Ordinarily, this would be great news for U.S. motorists, sending prices at the pump lower. But there appears to be a limit to what effect falling crude oil prices have on what motorists pay for gasoline.

The national average price of regular gasoline has been below $3 a gallon for months now. Lower oil prices, due to a building over-supply, will have a muted effect because the crude oil has to be turned into gasoline at refineries, and there is a finite refinery capacity.

Stability

But while the Iran deal might not send U.S. gasoline prices lower, it should keep them from going up, even with the country using more fuel.

“The demand for gasoline has been impressive over the last few months,” Patrick DeHaan, senior petroleum analyst at Gas Buddy, told ConsumerAffairs. “This summer demand for gasoline has been the highest in years, most likely due to the lower price.”

As long as demand does not outstrip refineries' ability to produce gasoline, pump prices should remain stable. The addition of Iranian oil to the world supply guarantees the glut of oil isn't going away anytime soon.

California still feeling pain

Currently, the national average price for self-serve regular is about $2.78 a gallon, according to the AAA Fuel Gauge Survey. As we reported last week, prices have shot up in California due to supply issues.

The average price in California is $3.80 a gallon, up 37 cents in the last week. Consumers in the Los Angeles area are feeling the most pain, paying an average of about $4.20 a gallon for gasoline.

It turns out there are a number of interested parties following the Justice Department's investigation into possible collusion among U.S. airlines.

In particular, it is travel-related businesses that have expressed some concern.

“We applaud the Department of Justice for its interest in protecting air travel for consumers,” the Travel Technology Association (Travel Tech) said in a statement. “There is less competition in air travel due to carrier consolidation. As a result, it is more important than ever that consumers continue to have the ability to effectively shop for transparent travel options across suppliers.”

The Travel Technology Association represents many of the websites consumers use to book travel, including Orbitz, Expedia, Priceline, Sabre, Amadeus, Travelport, Skyscanner, Airbnb, HomeAway, TripAdvisor, CheapOAir, and Vegas.com.

As such, it has a bone to pick with airlines that it says have adopted policies that restrict the availability of fare and schedule information in the marketplace.

Negatively impacting consumer welfare

“Limiting access to airline content through the independent channel – which provides travelers with the transparency and choice they demand – negatively impacts consumer welfare,” the group said.

In a study it released in May, the association claims that if airlines are successful in efforts to restrict access to flight information, ticket prices would rise more than 11% for leisure and unmanaged business travelers. That, I says, would translate into about $30 more for the average ticket.

“Preserving the competitive benefits of consumers’ ability to access comparative and transparent information on prices and schedules of major U.S. airlines is more important than ever,” writes Scott Morton, author of the study. “At a time when independent, transparent comparison shopping is most needed, some airlines are attempting to restrict access to their fare and schedule information, reduce the ability of consumers to easily compare prices, and drive travelers to their own websites, which do not offer price comparisons with other airlines.”

Statements by airline executives

The association has also expressed concern about recent statements by airline executives during a June round table discussion in Miami, hosted by the International Air Transport Association (IATA). The group of airline CEOs reportedly talked approvingly of recent actions by a U.S. airline to implement new discriminatory surcharges on consumers who choose to book travel through third-party channels.

“The events at the Miami IATA meeting may suggest a coordinated effort by the airlines present – and by the larger trade group – to promote and potentially collectively impose the surcharge,” Travel Tech said. “Those events raise serious questions as to whether the airlines and IATA departed from their obligations to compete, not coordinate, when it comes to the imposition of fares, fees and surcharges on their customers.”

Travel Tech is not the only trade group unlikely to volunteer as character witnesses should the Justice Department eventually bring anti-competitive charges against United, America, Delta and Southwest airlines – the objects of the probe. Others in the travel industry might prove reluctant as well.

Alarm

Earlier this month the U.S. Travel Association expressed “alarm” at the government's announcement of the airline investigation. Association CEO Roger Dow worried that the traveling public is already “jaded” about flying and hoped that, where the Justice Department sees smoke, there is no fire. Still, he says the airline industry has invited much of this unwelcome scrutiny.

"If not for the radical consolidation we have seen in the airline industry in the last few years, we probably would not even be having this conversation,” Dow said. “Now that 4 carriers control 85% of domestic routes, 'collusion' is a thought that's constantly going to be in the back of the minds of federal regulators.”

Dow says Congress could increase airline competition by making it easier for airports to raise funds for expansion. Many Wall Street analysts disagree, however. They says airlines have only recently become profitable by consolidating and, in essence, reducing competition.

Google accidentally revealed more than it intended to in its latest transparency report. The Guardian reported today that it discovered “new data hidden in source code on Google’s own transparency report that indicates the scale and flavour of the types of requests being dealt with by Google – information it has always refused to make public. The data covers more than three-quarters of all requests to date.”

Those “requests” the Guardian mentioned are link-takedown requests invoking the so-called “right to be forgotten,” a legal [privilege and/or burden, depending who you ask] covering people and organizations in the European Union, but not in the United States (though some U.S.-based consumer groups would like to see that change).

Origins of "right to be forgotten"

The European “right to be forgotten” dates back to May 2014, when the E.U. Court of Justice ruled that Google and other search engines are, in at least some circumstances, legally obligated to stop linking to old news stories about various people — true and accurate news stories about people — if the people in question request it.

The original case was brought by a Spanish national, Mario Costeja González, whose house was auctioned off for unpaid taxes back in 1998. A Spanish newspaper printed legal notices about the proceedings — standard operating procedure for a local paper, in Spain or in America — and then in 2009, Costeja asked the newspaper to remove the stories from their online archives and also asked Google to stop linking to the stories, on the grounds that those 11-year-old news pieces about his debts were no longer relevant, since the debts in question had been settled.

Google and the newspaper refused, so Costeja sued them both. The court sided with the newspaper – so it is not required to remove the stories from its website. But the court also sided against Google – the stories can stay online, but Google has to stop linking to them when people search for the name “Mario Costeja González.” Specifically, Google and other search engines must honor certain takedown requests which involve “irrelevant and outdated” search results.

Data leak

As soon as the European court announced its decision, Google was inundated with takedown requests. Within two days of the court ruling, the BBC mentioned three of them: a politician running for re-election asked Google to stop linking to old news stories about his behavior while in office, a pedophile wanted Google to stop linking to news articles about his previous criminal conviction for possession of child pornography, and a doctor wanted to take down links to negative reviews written by his patients.

But that was only during the first two days of Europe's “right to be forgotten.” That right is now 14 months old and, according to the Guardian, “Less than 5% of nearly 220,000 individual requests made to Google to selectively remove links to online information concern criminals, politicians and high-profile public figures … with more than 95% of requests coming from everyday members of the public.”

Not that you'll find this statistic in the transparency report itself. The Guardian figured it out by analyzing previously archived versions of older transparency reports. The data “details the numeric breakdown of each request and associated link by country and issue type. The underlying source code has since been updated to remove these details.”

Largely private and personal information

Information about specific takedown requests doesn't seem to be available, but the Guardian said that “Of 218,320 requests to remove links between 29 May 2014 and 23 March 2015, 101,461 (46%) have been successfully delisted on individual name searches. Of these, 99,569 involve 'private or personal information'.”

Although some consumer or privacy groups want Google to honor a similar “right to be forgotten” in America – and even asked the Federal Trade Commission to require it – it's not certain whether such a law would even be constitutional. Unlike Europeans, Americans have First Amendment guarantees to free speech and a free press, which sometimes means that laws allowable in the E.U. wouldn't pass constitutional muster in the United States (and, conversely, that certain U.S. laws and practices violate privacy laws in the E.U.).

For example: in Europe, you won't find many websites like ConsumerAffairs or Yelp, for the simple reason that businesses can bring libel charges against anyone who speaks ill of them and have a reasonable certainty of winning, even if the criticism is accurate. (And now, even if websites like ConsumerAffairs did operate in Europe, it might be illegal for Google to link to our stories anyway.)

That said, European supporters of the “right to be forgotten” will likely view the accidental Google data dump as evidence favoring their cause. The Guardian quoted Dr. Paul Bernal, a lecturer in technology and media law at the University of East Anglia, as saying that the data suggests the right to be forgotten is a legitimate law (in the United Kingdom): “If most of the requests are private and personal ones, then it’s a good law for the individuals concerned. It seems there is a need for this – and people go for it for genuine reasons.”

It might have been enough that this year marked the the 40th anniversary of the movie “Jaws”, but then there was a rash of shark attacks along North Carolina's Outer Banks.

All of a sudden long-dormant fear of an ocean predator was top of mind among the public. It wasn't just “Shark Week” on a popular cable TV channel – it was shark summer.

All of this makes conservationists uncomfortable and worried that the U.S. is about to declare war on sharks. That would be a mistake, they say.

Coexisting with predators

"We don't necessarily have to see conservation and public safety as at odds with each other,” said Fiorenza Micheli, a Stanford researcher and co-author of a new study tracing the history of shark attacks in California. “This is also true of coastal economies. People can coexist with predators."

Micheli and fellow researcher Francesco Ferretti say they found that the risk of a great white shark attack for individual ocean users in California has fallen by over 91% since 1950. To arrive at that figure they looked at the number of reported great white shark attacks that caused injuries on the California coast from 1950 to 2013, as recorded by the Global Shark Attack File.

During that time there were 86 attacks, with 13 of them being fatal. They weighted the numbers with information on coastal population growth and seasonal and weekly beach-going, surfing, scuba diving, abalone diving, and swimming.

The number of attacks has actually increased over the years, but the scientists attribute that to the fact that there are a lot more people in the ocean – not necessarily more sharks.

For example, they argue that three times as many people live in coastal California now than in 1950. The 7,000 surfers in 1950 became 872,000 by 2013. Certified scuba divers grew from about 2,000 at the beginning of the 1960s to about 408,000 in 2013.

Avoiding sharks

The study also looks at when and where shark attacks take place, offering guidance for swimmers who want to avoid them.

"Doing this kind of analyses can inform us on hot spots and cold spots for shark activity in time and space that we can use to make informed decisions and give people a way to stay safe while they are enjoying the ocean,"

For example, in the fall there is a higher chance of finding big white sharks on the California coast than in the spring, when they migrate to Hawaii, said Ferretti. He points out that the chance of a shark attack increases at night. 

The authors say that in Mendocino County, Calif., it is 24 times safer to surf in March than in October and November. If surfers choose the coast between Los Angeles and San Diego in March, they can be 1,566 times safer than they would be during the fall months in Mendocino.

Meanwhile, the reason for eight shark attacks along North Carolina's beaches this summer remains a mystery. According to National Geographic, warmer water and ocean currents may have attracted smaller fish, which in turn attracted sharks. But the magazine states that it's probably due to more humans being in the water.

In North Carolina, evidence is piling up that suggests there are also a lot more sharks in the water. Charter boat captains interviewed by the Richmond Times-Dispatch say there is now an over-population of sharks off the Carolina coast that has been building for years.

Some tuna fishermen say they are only able to boat half their catches before they are at least partially eaten by sharks.

Rexulti (brexpiprazole) tablets have won approval from U.S. Food and Drug Administration (FDA) to treat adults with schizophrenia and as an add-on treatment to an antidepressant medication to treat adults with major depressive disorder (MDD).

The effectiveness of Rexulti in treating schizophrenia was evaluated in 1,310 participants in two 6-week clinical trials. Rexulti was shown to reduce the occurrence of symptoms of schizophrenia compared with placebo.

The effectiveness of Rexulti as an add-on treatment for MDD was evaluated in two 6-week trials that compared Rexulti plus an antidepressant with placebo plus an antidepressant in 1,046 participants for whom an antidepressant alone did not adequately treat their symptoms. The participants taking Rexulti reported fewer symptoms of depression than those taking the placebo.

Boxed warning included

Rexulti and other drugs used to treat schizophrenia have a Boxed Warning alerting health care professionals about an increased risk of death associated with the off-label use of these drugs to treat behavioral problems in older people with dementia-related psychosis. No drug in this class is approved to treat patients with dementia-related psychosis.

The Boxed Warning also alerts health care professionals and patients to an increased risk of suicidal thinking and behavior in children, adolescents, and young adults taking antidepressants. Patients should be monitored for worsening and emergence of suicidal thoughts and behaviors. Rexulti must be dispensed with a patient Medication Guide that describes important information about the drug’s uses and risks.

The most common side effects reported by participants taking Rexulti in clinical trials included weight gain and an inner sense of restlessness, such as feeling the need to move.

Severe disorder

Schizophrenia is a chronic, severe, and disabling brain disorder affecting about 1% of Americans. Typically, symptoms are first seen in adults younger than 30 years of age and include hearing voices; believing other people are reading their minds or controlling their thoughts; and being suspicious or withdrawn.

MDD, commonly referred to as depression, is also a severe and disabling brain disorder characterized by mood changes and other symptoms that interfere with a person's ability to work, sleep, study, eat, and enjoy once-pleasurable activities. Episodes of depression often recur throughout a person's lifetime, although some may experience a single occurrence.

Other signs and symptoms of MDD include loss of interest in usual activities; significant change in weight or appetite; insomnia or excessive sleeping (hypersomnia); restlessness/pacing (psychomotor agitation); increased fatigue; feelings of guilt or worthlessness; slowed thinking or impaired concentration; and suicide attempts or thoughts of suicide. Not all people with MDD experience the same symptoms.

“Schizophrenia and major depressive disorder can be disabling and can greatly disrupt day-to-day activities,” said Mitchell Mathis, M.D., director of the Division of Psychiatry Products in the FDA’s Center for Drug Evaluation and Research. “Medications affect everyone differently so it is important to have a variety of treatment options available for patients with mental illnesses.”

Rexulti is manufactured by Tokyo-based Otsuka Pharmaceutical Company.

The inventory of homes in foreclosure plummeted 27.4% in May, while completed foreclosures were down by 19.2% from the same time a year ago, according to the CoreLogic National Foreclosure Report .

Additionally, the provider of property information reports the number of foreclosures nationwide decreased year over year from 51,000 in May 2014 to 41,000 in May 2015, representing a plunge of 64.9% from the peak of completed foreclosures in September 2010.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial meltdown began in September 2008, there have been approximately 5.7 million completed foreclosures across the country; since home-ownership rates peaked in the second quarter of 2004, there have been approximately 7.8 million homes lost to foreclosure.

As of this past May, the national foreclosure inventory included approximately 491,000, or 1.3%, of all homes with a mortgage compared with 676,000 homes, or 1.7%, in May 2014. This is the lowest foreclosure rate since December 2007.

Serious delinquencies down sharply

CoreLogic also reports that the number of mortgages in serious delinquency (defined as 90 days or more past due, including those loans in foreclosure or REO) fell 22.7% from May 2014 to May 2015, with 1.3 million mortgages, or 3.5%, falling into this category. This is the lowest serious delinquency rate since January 2008. On a month-over-month basis, the number of seriously delinquent mortgages dipped 3.4%.

“With three million jobs created during the past year, the improving labor market has helped more borrowers stay current on their mortgage loan,” said Frank Nothaft, chief economist for CoreLogic. “Because fewer loans are becoming seriously delinquent, the foreclosure inventory has come down to its lowest level in more than seven years, with only 1.3% of loans in foreclosure proceedings.”

Report highlights

• On a month-over-month basis, completed foreclosures increased by 4.1% from the 39,000 reported in April 2015. As a basis of comparison, before the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month nationwide between 2000 and 2006.
• The 5 states with the highest number of completed foreclosures for the 12 months ending in May 2015 were: Florida (104,000), Michigan (46,000), Texas (33,000), California (28,000) and Ohio (27,000). These 5 states accounted for almost half of all completed foreclosures nationally.
• Four states and the District of Columbia had the lowest number of completed foreclosures for the 12 months ending in May 2015: South Dakota (19), District of Columbia (105), North Dakota (326), Wyoming (498) and West Virginia (500).
• Four states and the District of Columbia had the highest foreclosure inventory as a percentage of all mortgaged homes: New Jersey (4.9%), New York (3.7%), Florida (2.9%), Hawaii (2.5%) and District of Columbia (2.4%).
• The 5 states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Alaska (0.3%), Colorado (0.4%), Minnesota (0.4%), Nebraska (0.4%) and North Dakota (0.4%).

“While the nation’s seriously delinquent rate -- 0 3.5% -- is at its lowest level since January 2008, it remains very high in several big markets,” said Anand Nallathambi, president and CEO of CoreLogic. “The greater New York City region and central Florida continue to have some of the highest serious delinquency rates, almost doubling the national level. Default rates remain elevated in the Chicago and Baltimore metro areas as well.”

Retail sales fell in June after rising for 2 consecutive months

Figures released by the Census Bureau show sales, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, totaled $442.0 billion. While that's down 0.3% from May, it's up 1.4% from the same time a year ago.

Major declines were seen in furniture and home furnishing stores (-1.6%), clothing and clothing accessories stores (-1.5%) and building material and garden equipment and supplies dealers (-1.3%). Sales at auto and auto parts dealers were down 1.1%.

Gainers included electronics & appliance stores (+1.0%), gas stations (+0.8) and general merchandise stores (+0.7%).

Core sales, which strip out 3 volatile categories -- auto and auto parts dealers, building material and garden equipment and supplies dealers, and gas stations -- were down 0.1%.

The complete retail sales report is available on the Commerce Department website.

Hyundai Motor America is recalling 128,804 model year 2015 Sonatas manufactured April 25, 2014, to December 4, 2014.

The front passenger seat belt's buckle latch assembly may prevent the passenger from fastening the seat belt. As a result, the occupant of the front passenger seat runs an increased risk of injury in the event of a crash.

Hyundai will notify owners, and dealers will repair or replace the front passenger seat belt buckle free of charge. The recall is expected to begin August 21, 2015.

Owners may contact Hyundai customer service at 1-855-671-3059. Hyundai's number for this recall is 130.

NatPets, doing business as "I and love and you," of Boulder, Colo., is recalling 1,299 cases of cow-boom! strips -- beef gullet.

The product may be contaminated with Salmonella.

There have been no reported pet or human illnesses associated with this recall.

The recall involves cow-boom! Strips – beef gullet packaged into 2.0-oz bags, with the lot numbers C20130-1994T1 and C20130-2024T1, a best-by-date of 07/2016 and UPC number 8 18336 01134 4.

The Company has notified its distributors and retailers and is taking this voluntary action as a precautionary measure. No other products of the company are affected by this recall.

Routine sampling by an inspector for the Colorado Department of Agriculture revealed the presence of Salmonella, which prompted this voluntary recall. This product is supplied by a U.S. supplier.

Customers who purchased this product should dispose of it or return it to the place of purchase for a full refund.

Consumers with questions may call at 855-ILY-LOVE Monday – Friday between 8:00 AM and 5:00 PM (MT) or by email at service@ilypet.com.

General Motors is recalling 47,042 model year 2011-2013 Chevrolet Caprice vehicles manufactured October 15, 2010, to October 22, 2013, and 2008-2009 Pontiac G8 vehicles manufactured July 25, 2007, to February 18, 2009.

The flexible steel cables that connect the seat belts to the vehicle at the outside of the driver seat and the front passenger seat may be bent from being sat on while entering the vehicle. This repeated bending may result in the cable breaking.

If the cable breaks, the seat occupant may not be properly restrained in the event of a crash, increasing their risk of injury.

GM will notify owners, and dealers will replace the seat belt tensioner assembly which includes the steel cable, free of charge. These replacement parts reposition the tensioner cable out of the path of entry into the vehicle and uses a more flexible cable, set at a more upright angle. The manufacturer has not yet provided a notification schedule.

Owners may contact Chevrolet customer service at 1-800-222-1020 or Pontiac customer service at 1-800-762-2737. GM's number for this recall is 15206.

Should rental car fleets have to perform safety recalls on the cars they rent to customers? Sen. John Thune thinks it should be left up to the customer. He has inserted language into a pending transportation funding bill that would allow rental car companies to keep renting recalled cars without bothering to fix them, as long as they notified renters in writing in advance.

But Sen. Barbara Boxer (D-Calif.), who earlier introduced a measure that would prohibit renting recalled cars, objects.

"This bill would give companies the federal government's blessing to rent out dangerous vehicles and shifts the liability onto consumers if something goes wrong," Boxer said Friday. 

Most rental car companies have voluntarily agreed to stop renting recalled cars to consumers until they are fixed and the major companies say they support Boxer's bill. 

A fatal error

But that didn't help Jewel Brangman, 26. She was driving a rented Honda Civic last Sept. 7 when she was involved in a collision. The Takata airbag spewed shrapnel-like metal into the car, inflicting a severe neck laceration and killing Ms. Brangman, who became the eighth person known to have died from Takata-caused injuries. 

The car had been recalled back in 2009 but its owner, Sunset Car Rental of San Diego, had never bothered to have the car, which had been bought at auction with a salvage title, fixed, a lawsuit filed by Ms. Brangman's family alleges. Sunset Car Rental is now out of business. 

So, if the major rental companies are supporting Boxer's bill, who is behind Thune's measure?

Car rental industry sources point the finger at NADA, the National Automobile Dealers Association. NADA did not immediately respond to a request for comment.

However, NADA President Peter Welch testified in 2013 that Boxer's bill was "overly broad in that it regulates auto dealerships that operate small rental or loaner fleets in the same manner as multi-national rental car giants."

"Unlike large rental car companies that maintain a wide array of vehicle makes and models in their fleets, many dealers only maintain a single vehicle model in their loaner pools," Welch said, saying the Boxer bill "could cause an economic hardship for small dealers if a part necessary to fix a dealer’s only loaner vehicle model is unavailable."

Welch also said that some safety recalls are really not for high-priority defects.

Manufacturers' influence?

Sources within the car rental industry suspect that one or more manufacturers are supporting the NADA effort because of "loss of use" concerns.

If a rental company is required to take hundreds of cars out of service for weeks or months waiting for parts needed to perform a recall, they can under some circumstances sue the manufacturer for the rental revenue they lose while the car sits idle on their lot. 

Last summer, the spike in recalls left rental companies with many cars out of service, putting a dent in revenue and causing inconvenience and frustration for consumers whose reservations could not be honored.

Thune's measure would make it easier for rental companies to keep recalled cars rolling down the road and ringing up revenue, partially relieving manufacturers' concerns.  

Not prohibited

Thune, who is the chairman of the Senate Committee on Commerce, Science and Transportation, inserted the language permitting rentals of recalled cars into S. 1732, the Comprehensive Transportation and Consumer Protection Act of 2015, a comprehensive measure commonly known as the "Highway Bill."

Under the provision, besides notifying customers in advance that their vehicle had been recalled, rental companies would also have 24 hours to notify customers if a recall notice was received during the time that the customer was using the car. 

But Thune's language makes clear that rental companies would be permitted to rent recalled cars: "Nothing in this subsection may be construed to prohibit a rental company from offering a motor vehicle for rent."

Thune did not respond to a request for comment but Frederick Hill, communications director for Thune's committee, said the measure is intended to be "pro-consumer." 

“Most rental companies do not rent vehicles under recall and some states also prohibit the practice. But in places where rental of vehicles under recall does occur, this provision would establish a new pro-consumer requirement that the recall status of a vehicle must be disclosed before renting a vehicle. This new requirement does not in any way preempt stronger state laws or stricter voluntary policies of individual rental companies,” Hill said.