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The rate of divorce among Americans age 50 and older has doubled since the 1990s. It has tripled for adults over 65 years old.
So-called “gray divorce” puts women at high financial risk.
There are steps women can take now to protect themselves.

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Breaking up in old age can be costly, especially for women.
The rate of “gray divorce” — a term that describes divorce at age 50 and older — doubled from 1990 to 2019, according to a 2022 study published in The Journals of Gerontology. It tripled for adults over age 65.

In 1970, about 8% of Americans who divorced were age 50 and older. By 2019, that share had jumped to an “astounding” 36%, the study found.
About 1 in 10 people — 9% — who divorced in 2019 were at least 65 years old.
Meanwhile, rates of divorce have declined among younger adults, according to Susan Brown and I-Fen Lin, sociology professors at Bowling Green State University who authored the analysis.

The ‘chronic economic strain’ of gray divorce

In heterosexual relationships, gray divorce typically “has more negative implications for women than for men,” said Kamila Elliott, a certified financial planner and co-founder of Collective Wealth Partners, based in Atlanta.
Studies suggest women’s household income generally drops between 23% and 40% in the year after a divorce.

The economic effects are “less severe” for men, with some studies showing their income may even rise after a breakup, according to Laura Tach and Alicia Eads, sociology professors at Cornell University and the University of Toronto, respectively. The duo have co-authored several papers on the topic.

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Those financial disparities seem to be more muted for younger generations of women due to a greater likelihood of them working relative to older cohorts, experts said. Many older adults who divorce today adhered to the traditional notion of a man as a household’s sole breadwinner, they said.
“We’re seeing women in divorce today who are of the generation where they just didn’t work their entire life,” said Natalie Colley, a CFP based in New York and senior lead advisor at Francis Financial.
Women also tend to earn lower incomes than men due to a persistent wage gap; they tend to have less savings, and near-retirees who are divorcing don’t have much time to make up the difference. Divorced women can claim a Social Security benefit based on their own earnings or a former spouse’s earnings history, but the latter option is generally worth only up to half of an ex’s benefit.

Remarrying or cohabitating generally helps bolster one’s finances via pooling of resources. But women who undergo gray divorce are less likely to do so than men: Only 22% of women re-partnered in the decade after gray divorce versus 37% of men, putting them at “sustained economic disadvantage into old age,” according to a separate paper by Brown and Lin.
Altogether, women’s standard of living declined by 45% following a gray divorce, while the drop for men was less severe, at 21%, Brown and Lin wrote.
These negative economic outcomes persisted over time, “indicating that gray divorce operates as a chronic economic strain,” they said.
Poverty levels among women old enough to qualify for Social Security retirement benefits are almost twice as high for women who divorced after age 50 as those who divorced before age 50, Brown and Lin found; the same isn’t true for men.

How women can protect themselves financially

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Here are some steps women can take to protect against the financial pitfalls of a potential future divorce, according to financial advisors.
Get active in your household finances. “Women should take a very active role in their household finances,” said Elliott, a member of CNBC’s Advisor Council.
Women shouldn’t get to a point where they’re unaware of their household’s spending, savings, and mortgage payments and interest rates, for example, she said. Such information could come as a surprise upon divorce, and women may learn they’re not financially well-protected.
Additionally, being unengaged from financial decision-making may mean they’re ill-equipped to handle their own finances if they become single, Colley said.
“I can’t tell you how many times I’ve met couples where the woman had no idea what the husband was doing financially,” Elliott said.
Have access to your own money. Many couples commingle their financial accounts. Many women may also be authorized users of credit cards instead of primary owners, Elliott said.
But women should ensure they have access to their own funds so their spouse can’t shut off the financial spigot if a relationship sours, Elliott said.

Additionally, women should consider investing or saving in their own retirement account, she added.
Retirement savers generally need earned income to open and contribute to an individual retirement account; however, women who don’t work can open a “spousal IRA” based on their spouse’s income. (You must be married and file a joint tax return to open one.)
Be strategic about claiming Social Security. Social Security is an important source of guaranteed income in retirement, especially for women.
The sequence of claiming benefits can be important for married couples and can help women hedge against divorce (or widowhood) later, Colley said.
For example, let’s say a husband is eligible for a larger Social Security benefit relative to his female spouse. He can defer claiming benefits to age 70, thereby maximizing his lifetime monthly benefit.
That increases the monthly benefit his wife could receive upon divorce or widowhood, and helps maximize a woman’s cash flow in such circumstances, Colley said.
Save some alimony. If a woman receives alimony after a divorce, she should aim to save some of it, instead of spending it all, Elliott said. That’s because alimony generally only lasts for a certain period — and women must make it last, she said.

I can’t tell you how many times I’ve met couples where the woman had no idea what the husband was doing financially.

Kamila Elliott
certified financial planner and co-founder of Collective Wealth Partners

“Just because you get alimony, it’s not business as usual” relative to spending levels, she said. “You probably need to reassess your lifestyle.”
Consider a prenuptial or postnuptial agreement. Couples can also consider a prenuptial agreement or postnuptial agreement that contains provisions to protect a woman financially if she leaves the workforce to care for their children, for example, Colley said.
Doing so generally permanently dents the caregiver’s earning power, and a legal agreement can help insulate against that financial risk, she added. For example, perhaps it stipulates the woman gets a guaranteed stream of income for a certain number of years if the marriage dissolves, Colley said. She recommends working with an attorney who specializes in such legal documents. More

Sovereign wealth funds and other investors are jostling to buy into an Anthropic stake worth more than $1 billion.
The AI startup has ruled out taking any Saudi money over national security concerns, sources say, despite the kingdom’s ambitions to get in on the AI boom.
Existing Anthropic stakeholders, including Amazon and Google, are not expected to increase their holdings in this round.

Deep-pocketed, sovereign wealth funds are among the investors clamoring to get a stake in Anthropic, the red-hot artificial intelligence startup that’s taking on OpenAI. One country that’s being left out: Saudi Arabia.
As bankers line up a group of potential new Anthropic backers, the company has ruled out taking money from the Saudis, according to people familiar with the matter. Anthropic executives cited national security, one of the sources told CNBC. 

The stake in Anthropic is for sale because it belongs to FTX, the failed cryptocurrency exchange started by Sam Bankman-Fried, and is being unloaded as part of the company’s bankruptcy proceedings. FTX bought the shares three years ago for $500 million. The 8% stake is now worth more than $1 billion due to the recent boom in AI.
Proceeds from the sale will be used to repay FTX customers. The transaction is ongoing and is on track to wrap up in the next couple weeks, said people with knowledge of the talks who asked not to be named because the negotiations are private.
The class B shares, which don’t come with voting rights, are being sold at Anthropic’s last valuation of $18.4 billion, sources said. Anthropic has raised roughly $7 billion in the last few years from tech giants like Amazon, Alphabet and Salesforce. Its large language model competes with OpenAI’s ChatGPT. 
Anthropic founders Dario and Daniela Amodei have the right to challenge any potential investors, according to the sources. However, they are not involved in the current fundraising process, or in the discussions with potential investors in FTX’s stake. The founders were introduced to Bankman-Fried through “effective altruism,” a philosophy that involves making as much money as possible to give it all away.

Saudi Crown Prince and Prime Minister Mohammed bin Salman meets U.S. Secretary of State Antony Blinken (not pictured), in Jeddah, Saudi Arabia March 20, 2024. 
Evelyn Hockstein | Reuters

While Anthropic’s founders told bankers they wouldn’t accept Saudi money, they don’t plan to challenge funding from other sovereign wealth funds, including United Arab Emirates fund Mubadala. The UAE-based firm is actively looking at investing, according to one of the sources.

The potential buyers of FTX’s shares comprise a syndicate of new investors for Anthropic, a source said, meaning Amazon and Alphabet would not be involved. Part of FTX’s stake is being shopped around through special purpose vehicles, or SPV, which allows multiple investors to pool capital. SPVs have been emailing venture firms to solicit participation, three sources said. Investment bank Perella Weinberg is handling the sale on behalf of FTX.
Representatives from Anthropic and Perella Weinberg declined to comment on the sale. Mubadala and Saudi Arabia’s Public Investment Fund, or PIF, didn’t immediately respond to a request for comment.
The PIF, Saudi Arabia’s sovereign wealth fund, has more than $900 billion in assets and has been plowing capital into technology to diversify the nation’s revenue away from oil. The fund is in talks with venture firm Andreessen Horowitz to create a $40 billion fund to invest in AI, two sources with knowledge of the matter told CNBC. The discussions were first reported by the New York Times. 
Saudi Crown Prince Mohammed bin Salman’s ambitious “Vision 2030 Initiative” has looked to modernize the economy and strengthen ties in global finance. The PIF has investments in companies including Uber, while also funding the LIV golf league and spending heavily in professional soccer and tennis.
Anthropic’s national security concerns regarding Saudi Arabia could be over dual-use technology — software or tech that can be used for both civilian and military applications. That’s an area of notable focus for the Committee on Foreign Investment in the United States (CFIUS), which can block foreign investments from particular sources in certain areas. Saudi Arabia has also been warming to China.
The kingdom’s human rights record remains a major problem for some Western partners. The most notable case in recent years was the alleged killing of Washington Post journalist Jamal Khashoggi in 2018, an event that triggered international backlash in the business community.
In November, Bankman-Fried was convicted of seven criminal counts tied to the collapse of FTX. His sentencing is scheduled for next week, and prosecutors are recommending a sentence of 40 to 50 years.
WATCH: Prosecutors recommend a 40-50 year prison sentence for SBF More

“Ghost” jobs are listings for jobs that may not actually exist or be available.
These specter ads can be frustrating for job seekers who take the time to fill out an application.
There are ways for applicants to maximize their odds of landing a role. The best strategies don’t include applying online, according to one career coach.

Fangxianuo | E+ | Getty Images

There can be ample roadblocks during a job hunt, including so-called “ghost” jobs.
These can be phantom listings for jobs that don’t exist, or those posted such a long time ago that it seems the job may not be available.

Luckily, there are ways for job seekers to sidestep the challenges of a potential specter job and raise their odds of landing as real gig, according to career experts.

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Ghost jobs aren’t a nascent phenomenon, but a hot pandemic-era job market turbocharged some seemingly bad behavior.
Ghosting among job seekers and employers, for example, has become more prevalent as parties more frequently go silent during the hiring process.
Recent labor market dynamics also brought terms like the great resignation, quiet quitting and loud quitting into the collective lexicon. Such “fun” new names belie the fact that these trends existed — albeit perhaps with less prevalence — before the pandemic, said Mandi Woodruff-Santos, a career coach.

10% had jobs open at least six months

Still, long-unfilled jobs seem to be ample, creating headaches for applicants.

For example, a basic search on LinkedIn showed about 1.8 million jobs had been posted on the site over a month ago, according to data available Friday.
In 2022, 10% of hiring managers reported having job ads that had been available for six months or more, according to a poll by Clarify Capital.
There’s a “good chance” jobs posted online for longer than two months are ghost jobs, wrote Aaron Case, a senior content writer at Resume Genius.

As a former hiring manager, Woodruff-Santos has seen firsthand why ghost jobs may exist: For example, a media company might simultaneously post ads for “senior editor” and “associate editor” roles — even though, in reality, the company only has one available job.
The strategy helps companies broaden the net of talent drawn to each role, she said, though it creates a ghost job in the process.
“It takes time” for workers to apply online, said Woodruff-Santos, founder of MandiMoney Makers. It’s “super frustrating and a horrible experience in some cases.”

Recruitment challenges are a culprit, as well.
A recent ZipRecruiter survey showed 57% of employers lacked qualified candidates, while 41% failed to fill a vacancy in the prior six months because candidates wanted more pay than the business could offer, the poll found.
Employers may also leave “dead-end” posts online to give the perception their company is growing and to collect resumes in the event a future role opens up, Case said.  

The ‘secret sauce of job searching’

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As one firewall, workers who see an attractive listing on an online job aggregation site should check to ensure the ad is listed simultaneously on an employer’s dedicated online job portal, Case said. Additionally, if the firm is still hiring, it may have recently posted about the job on its social media feeds, he said.
There are instances in which it might still make sense for job seekers to apply online for a position posted months ago — especially for candidates who are especially interested in a role for which they’re also a great fit, said Woodruff-Santos.
That’s because there’s a chance the hiring process has been prolonged due to a dearth of qualified applicants, or that the business might contact an applicant later if a position becomes available, she said.

However, online applications only “scratch the surface” when it comes to maximizing one’s odds of finding a new job, she said.
Building personal relationships is the most powerful tool at job seekers’ disposal, she added.
For example, successful job seekers work to leverage contacts like friends, family, former colleagues and others who can refer them to a manager at a prospective company; or they put themselves in environments like conferences, meetups, seminars and trainings to meet people who may have opportunities now or in the future.
“It’s about putting yourself in the space where you can get lucky, where you can run into someone on an elevator who may know someone,” Woodruff-Santos said. “This is the secret sauce of job searching,” she added.
“The real goal you should have is to build such a great reputation in your industry and build so many relationships that people come to you before you even need a job,” she said. More

The U.S. Federal Reserve on Wednesday raised its U.S. GDP growth projection to 2.1% for 2024, up from 1.4% in its December outlook, as the economy continues to display resilience.
But the labor market has remained relatively hot and January and February inflation prints dampened hopes that price increases were fully under control.
“I think one thing that was really underestimated in the U.S. was the immigration story,” Joyce Chang, chair of global research at JPMorgan, told CNBC on Thursday.

U.S. commuters.
Caroline Purser | The Image Bank | Getty Images

The recent surge in immigration into the U.S. is helping to bolster the economy despite a raft of global challenges, according to Joyce Chang, chair of global research at JPMorgan.
The U.S. Federal Reserve on Wednesday raised its U.S. GDP growth projection to 2.1% for 2024, up from 1.4% in its December outlook, as the economy continues to display resilience despite high interest rates as the central bank seeks to manage inflation levels.

Meanwhile, the labor market has stayed relatively hot despite tighter monetary conditions, with unemployment remaining below 4% in February and the economy adding 275,000 jobs.
The Fed also raised its projections for its preferred measure of inflation: core personal consumption expenditure. It now expects the core PCE to come in at 2.6%, up from 2.4%, after January and February inflation prints dampened hopes that price increases were fully under control.
The core consumer price index, which excludes volatile food and energy prices, rose 0.4% in February on the month and was up 3.8% on the year, slightly higher than forecast.
“We are still seeing the phenomena around the globe that services inflation is still well above where it was before the pandemic, so we’re looking at 3% for core CPI, but I think one thing that was really underestimated in the U.S. was the immigration story,” Chang told CNBC’s “Squawk Box Europe” on Thursday.
“The U.S. population is almost 6 million higher than it was two years ago or so, and so that has accounted for a lot of the increase in consumption, when you see the very low unemployment numbers as well.”

She noted that upward pressure on wages and housing costs, along with a resurgence in energy prices so far this year, suggest that the Fed is “not out of the woods yet” when it comes to inflation.
A recent Congressional Budget Office report estimated that net immigration to the U.S. was 3.3 million in 2023 and is projected to remain at that level in 2024, before dropping to 2.6 million in 2025 and 1.8 million in 2026.
Immigration, and particularly border crossings, is among the hottest topics in the run-up to the November presidential election. Chang suggested that other events could exacerbate the issue, particularly the unfolding situation in Haiti.
However, she argued that in terms of net impact on the economy, immigration is “a good thing.”
“From everything that we have seen, the revenues that are generated exceed the expenses. Now it is a political issue, not just here in the U.S. but you look at Europe, it’s also probably the No. 1 issue right now, but we do think that when you look at the unemployment numbers, the strength of consumption, the immigration was a big part of that,” Chang said.

Other factors that have enabled the U.S. economy to outperform its peers include its high fiscal deficit and its energy independence, Chang added. Europe has struggled in recent years to eradicate its reliance on Russia for energy supply.
Meanwhile, the Congressional Budget Office projects that the U.S. federal budget deficit totaled $1.4 trillion in 2023, or 5.3% of GDP, which will swell to 6.1% of GDP in 2024 and 2025.
“I think that also in an election year you’re going to see a lot of spending before Sept. 30 as well, so there aren’t really many signs that those numbers [will subside]. I think that’s one reason why I do think that higher for longer will be here to stay,” Chang added. Sept. 30 is the end of the U.S. government’s fiscal year.
With this in mind, JPMorgan sees only a “shallow” loosening cycle from the Federal Reserve, with inflationary pressures set to persist against the backdrop of high government spending and immigration.

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Investors differ in their approach to elections. Some see politics as an edge to exploit; others as noise to block out. Even for those without a financial interest, markets offer a brutally frank perspective on the economic stakes. As elections approach in America and Britain, as well as plenty of other countries, that is especially valuable.Take what happened before and after America’s presidential election in 2020. Green-energy and cannabis stocks briefly became market darlings as the odds of a victory for Joe Biden rose, since investors expected his administration to enact policies favourable to both. Exchange-traded funds covering the sectors rallied by over 100% from two months before the election to Mr Biden’s inauguration, before later dropping as investors scaled back their optimism.What are markets saying about the current race for the White House? The candidates’ agendas are similar in places. Both tilt protectionist (though Mr Trump’s plans are more radical); both would oversee hefty deficits (though with different beneficiaries). But there are also big differences. Mr Trump has vowed to end Europe’s freeriding on America’s defence budget; Mr Biden is unlikely to renew tax cuts from Mr Trump’s first term that expire in 2025. Mr Trump would gut Mr Biden’s Inflation Reduction Act (IRA), redirecting green spending to fossil fuels. Mr Biden sees Mexico as somewhere to “friendshore”; Mr Trump sees it as a bogeyman.This means that some listed firms stand to win, while others look likely to lose out. Higher European military spending would boost the continent’s defence firms. If Mr Trump were to roll back the IRA, solar-power providers and electric-car makers would be hurt, while owners of coal plants would be rather happier. If the vote is close, and supporters of the losing candidate riot, shares in architectural-glass firms should do well.Speculators can bet on the outcome of the election by investing money accordingly. Indeed, a portfolio of company stocks that ought to benefit if Mr Trump wins, as well as short positions on companies that ought to lose out in such a scenario, tracks Mr Trump’s odds of winning the election in betting markets. The chart below shows one such basket, assembled by Citrini Research, a research firm.image: The EconomistWhat about the consequences for broader asset classes? Investors who would prefer to avoid politics used to be able to shield themselves by simply holding a diversified portfolio. After all, in well-functioning democracies, politics rarely affected overall stockmarket returns, sovereign bonds or currencies. When assessing past American presidential elections, JPMorgan Chase, a bank, finds there is no clear relationship between the outcome and subsequent overall stockmarket performance.Avoiding politics is becoming more difficult, however. Pity anyone trading British markets while ignoring Brexit negotiations or the policies of Liz Truss, who was prime minister for the life of a lettuce in 2022. Elections also drive moves in emerging markets, which is why Brexit prompted half-joking concerns that Britain had become one. Until the run-up to the referendum there was virtually no relationship between gauges of political risk and the implied volatility of sterling as measured by options, which captures how much hedging currency moves costs. Since then, the two have tracked one another closely.Yet rather than being an outlier, Britain’s experience may presage a global trend. Enthusiasm for state spending is now widespread, and fiscal excess can have large and unforeseeable consequences. The Democrats’ knife-edge win in the Georgia US senate election in 2021 unlocked a bevy of stimulus, for instance. Treasury yields rose by 0.1 percentage points that day—a big move but not an unusual one. With hindsight, it is clear that fiscal largesse amplified inflation, meaning an even larger move would have been justified.Moreover, politics does not only matter more for markets; its effects are also becoming less predictable. Take a scenario troubling many investors today: that Mr Trump carries out his threat to replace Jerome Powell, the Federal Reserve chairman. Would bond yields fall on expectations of looser monetary policy, or rise as a Ms-Truss-style “moron risk premium” became baked in? The answer is far from obvious. Its importance could not be any clearer.■Read more from Buttonwood, our columnist on financial markets: The private-equity industry has a cash problem (Mar 14th)How investors get risk wrong (Mar 7th)Uranium prices are soaring. Investors should be careful (Feb 28th)Also: How the Buttonwood column got its name More

“Economics is a study of mankind in the ordinary business of life.” So starts Alfred Marshall’s “Principles of Economics”, a 19th-century textbook that helped create the common language economists still use today. Marshall’s contention that economics studies the “ordinary” was not a dig, but a statement of intent. The discipline was to take seriously some of the most urgent questions in human life. How do I pay my bills? What do I do for a living? What happens if I get sick? Will I ever be able to retire?In 2003 the New York Times published a profile of Steven Levitt, an economist at the University of Chicago, in which he expressed a very different perspective: “In Levitt’s view,” the article read, “economics is a science with excellent tools for gaining answers but a serious shortage of interesting questions.” Mr Levitt and the article’s author, Stephen Dubner, would go on to write “Freakonomics” together. In their book there was little about the ordinary business of life. Through vignettes featuring cheating sumo wrestlers, minimum-wage-earning crack dealers and the Ku Klux Klan, a white-supremacist organisation, the authors explored how people respond to incentives and how the use of novel data can uncover what is really driving their behaviour.Freakonomics was a hit. It ranked just below Harry Potter in the bestseller lists. Much like Marvel comics, it spawned an expanded universe: New York Times columns, podcasts and sequels, as well as imitators and critics, determined to tear down its arguments. It was at the apex of a wave of books that promised a quirky—yet rigorous—analysis of things that the conventional wisdom had missed. On March 7th Mr Levitt, who for many people became the image of an economist, announced his retirement from academia. “It’s the wrong place for me to be,” he said.During his academic career, Mr Levitt wrote papers in applied microeconomics. He was, in his own self-effacing words, “a footnote to the ‘credibility revolution’”. This refers to the use of statistical tricks, such as instrumental-variable analysis, natural experiments and regression discontinuity, which are designed to tease out causal relationships from data. He popularised the techniques of economists including David Card, Guido Imbens and Joshua Angrist, who together won the economics Nobel prize in 2021. The idea was to exploit quirks in the data to simulate the randomness that actual scientists find in controlled experiments. Arbitrary start dates for school terms could, for instance, be employed to estimate the effect of an extra year of education on wages.Where the Freakonomics approach differed was to apply these techniques to “the hidden side of everything”, as the book’s tagline put it. Mr Levitt’s work focused on crime, education and racial discrimination. The book’s most controversial chapter argued that America’s nationwide legalisation of abortion in 1973 had led to a fall in crime in the 1990s, because more unwanted babies were aborted before they could grow into delinquent teenagers. It was a classic of the clever-dick genre: an unflinching social scientist using data to come to a counterintuitive conclusion, and not shying away from offence. It was, however, wrong. Later researchers found a coding error and pointed out that Mr Levitt had used the total number of arrests, which depends on the size of a population, and not the arrest rate, which does not. Others pointed out that the fall in homicide started among women. No-fault divorce, rather than legalised abortion, may have played a bigger role.Other economists, including James Heckman, Mr Levitt’s colleague in Chicago and another Nobel prizewinner, worried about trivialisation. “Cute”, was how he described the approach in one interview. Take a paper on discrimination in the “The Weakest Link”, a game show in which contestants vote to remove other contestants depending on whether they think they are costing them money by getting questions wrong (in the early portion of the game) or are competition for the prize pool by getting them right (later on). That provided a setting in which Mr Levitt could look at how observations of others’ competence interacted with racism and sexism. A cunning design—but perhaps of limited relevance in understanding broader economic outcomes.At the heart of Mr Heckman’s critique was the idea that practitioners of such studies were focusing on “internal validity” (ensuring estimates of the effect of some change were correctly estimated) over “external validity” (whether the estimates would apply more generally). Mr Heckman instead thought that economists should create structural models of decision-making and use data to estimate the parameters that explained behaviour within them. The debate turned toxic. According to Mr Levitt, Mr Heckman went so far as to assign graduate students the task of tearing apart the Freakonomics author’s work for their final exam.Did you know…Neither man won. The credibility revolution ate its own children: subsequent papers often overturned results, even if, as in the case of those popularised by Freakonomics, they had an afterlife as cocktail-party anecdotes. The problem has spread to the rest of the profession, too. A recent study by economists at the Federal Reserve found that less than half of the published papers they examined could be replicated, even when given help from the original authors. Mr Levitt’s counterintuitive results have fallen out of fashion and economists in general have become more sceptical.Yet Mr Heckman’s favoured approaches have problems of their own. Structural models require assumptions that can be as implausible as any quirky quasi-experiment. Sadly, much contemporary research uses vast amounts of data and the techniques of the “credibility revolution” to come to obvious conclusions. The centuries-old questions of economics are as interesting as they always were. The tools to investigate them remain a work in progress. ■Read more from Free exchange, our column on economics:How NIMBYs increase carbon emissions (Mar 14th)An economist’s guide to the luxury-handbag market (Mar 7th)What do you do with 191bn frozen euros owned by Russia? (Feb 28th)For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter More

For five years homeowners have been waging war. They have railed against the extortionate fees charged by estate agents, known as “realtors” in America, which are enforced by anticompetitive practices. They have filed lawsuits against brokers; fought cases against the National Association of Realtors (nar), an industry body; and sued the keepers of databases of homes for sale, known as “multiple-listing services”. Juries and judges across the country have found merit in their claims, deciding that homeowners have been ripped off, manipulated and duped into overpaying. In recent months they have awarded billions of dollars to plaintiffs and sent the two sides into negotiations over the rules that control realtors’ practices.How wonderful it would be to believe that a settlement reached on March 15th, between the plaintiffs in several class-action lawsuits and the NAR, was about to usher in a fairer, cheaper era. That is how the agreement was described by the New York Times, which plastered the headline “Powerful realtor group agrees to slash commissions to settle lawsuits” across its scoop revealing that the agreement had been reached. CNN wrote that the settlement would “effectively destroy” the industry’s anticompetitive rules. The notion that victory is now assured has even been seized upon by the White House, which is desperate for any kernel of good news about housing affordability ahead of the presidential election in November. On March 19th President Joe Biden declared that the settlement was “an important step toward boosting competition in the housing market”, adding that it could reduce transaction costs by “as much as $10,000 on the median home sale.”It is not at all clear, however, that this settlement will actually bring about a Utopia of greater competition and lower commissions. And the stakes are too high to accept such a settlement, which also protects brokers and agents from future lawsuits that might seek more reform. Under the existing system Americans pay 5-6% commission on almost every sale, triple the level in other rich countries. Since they trade homes collectively worth $2.8trn each year, if commissions fell to just 2% Americans would save $110bn in fees annually.image: The EconomistThe problem boils down to a tactic called “steering”. In America it is both legal and expected that a home seller will make a blanket offer of compensation to any realtor who brings them a buyer. Often this is a proposal to split commission equally: if the total compensation is 6%, the seller’s agent and the agent of the buyer will each receive 3%. The problem is that although sellers can negotiate with their own agent and drive down that side of the bargain, if they attempt to offer a low commission to a buyer’s agent they will be told—correctly—that their home will get less interest and no decent offers.It is not necessary to believe that realtors are morally bankrupt in order to see how this system perpetuates itself. The risk that even, say, 10% of agents might steer buyers away from a low-commission listing is enough to ensure that all the honourable ones benefit, since sellers offer 3% to ensure they do not lose out. This enforces a floor in total commissions.Keep fightingThe settlement, which needs to be approved by a judge before being implemented in July, does little to tackle this underlying problem. One of its main provisions is that offers of buyer-agent compensation can no longer be published on a multiple-listing service, the databases used in the industry. But they can still be made, and can be published on websites or explained via text or a phone call. In Facebook groups and Reddit threads, realtors are already discussing such workarounds.Another provision is that, before employing an agent’s services, buyers must sign an agreement outlining how the agent will be paid. At present buyers almost never discuss, and often do not even know, how much money their agent is making. They just know it is not their problem, since the fee is covered by the seller.It is just about possible to see how this provision could erode the floor in buyer-agent compensation. If agents are required to tell buyers they intend to collect 3% of the sale price, and that—in the unlikely event a seller is not offering compensation—the buyer will be on the hook for it, cash-strapped buyers might seek a cheaper option instead. They might also reject the idea that their agent is worth 3%, and could argue for any compensation above a certain level, perhaps 1%, to be kicked back to them after the purchase.Yet this probably assumes too much savvy on the behalf of buyers, and too little ingenuity from agents. Realtors might simply agree to add a clause to any contract reassuring buyers that they will not go after them for cash in the event a seller offers low commission, before steering them away from such properties, notes Rob Hahn, an industry analyst.The Department of Justice (DoJ) could intervene. It did so in a case in Massachusetts, arguing that the agreement would not fix the problem of steering and was therefore insufficient. Officials appointed by the Biden administration have been constrained by a letter sent by those in the Trump one, which agreed to close a probe into the industry. When the current DoJ attempted to reopen it, the department was sued by the NAR, which argued it should not renege on the earlier promise. But an appeals court in the District of Columbia hearing this case sounded sceptical of the NAR’s arguments. That could pave the way for the DoJ to make a move.Whether by killing the current settlement or opening its own probe, the doj would be wise to act. Homebuyers and sellers in America do not stand a chance of paying a fair price for commissions under the current approach. And the settlement as agreed offers no guarantee that they will have such a chance in the future. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Time served on Wall Street has long smoothed the path to the top job at America’s Treasury. Before he was the first treasury secretary Alexander Hamilton could boast, among other things, a role in establishing the Bank of New York, which is still in business. More recently, and somewhat less heroically, Robert Rubin and Hank Paulson both ran Goldman Sachs, a bank, before taking office. As its name suggests, the “revolving door” sends people in the other direction, too. Mr Rubin went on to hold senior positions at Citigroup, another bank. Cerberus Capital Management and Warburg Pincus, two investment firms, are chaired by John Snow and Timothy Geithner respectively.Now Steven Mnuchin, a former partner at Goldman Sachs who served as treasury secretary throughout the presidency of Donald Trump, has leapt back into the limelight. In 2021 he set up Liberty Strategic Capital, an investment firm. That much of the cash raised by Liberty came from sovereign-wealth funds in the Middle East raised some eyebrows. Until recently, the firm’s investments did not. But this month Liberty led the capital raise by New York Community Bank (NYCB) after losses relating to the bank’s property loans caused its shares to tank. That deal closed on March 11th. Three days later Mr Mnuchin told CNBC that he was trying to buy TikTok after America’s House of Representatives passed a bill that would force its Chinese owner, ByteDance, to sell the social-media app or face a ban in America.Before this flurry of high-profile dealmaking, the firm mainly invested in privately held cyber-security firms. Some of its bets look like duds. In 2021 Liberty invested $200m in Cybereason, valuing the firm at $2.7bn. After plans to list its shares were shelved, Cybereason’s next capital raise in 2023 implied a valuation of just $575m, according to PitchBook, a data provider. At the beginning of 2022 Liberty invested $150m in Satellogic when the firm merged with a special-purpose acquisition company to list its shares. Today shares in Satellogic are worth less than a quarter of what Mr Mnuchin’s firm paid for them.Mr Mnuchin has experience of investing in banking. In 2009 he led a group of investors that purchased IndyMac, a casualty of the global financial crisis, before offloading it in 2015. As part of nycb’s $1bn capital raise, Joseph Otting, who served as a senior Treasury official responsible for bank supervision during the Trump administration, has been appointed as the firm’s chief executive. Meanwhile, Liberty stumped up $450m of the cash. Although the deal bolsters NYCB’s capital, cleaning up its loan portfolio will take longer. The extent to which investors’ confidence holds up while this happens remains to be seen—indeed, this week the bank’s shares fell by 7% after analysts at Raymond James, yet another bank, expressed doubts about the speed of NYCB’s turnaround.But managing a struggling regional bank is light work compared with engineering a buy-out of TikTok. Mr Mnuchin has not said who would feature in his consortium, only that it would be controlled by American businesses, and that no single investor should own more than 10%. Finding the money would surely be the most straightforward part of executing the deal. Democrats may balk at the involvement of private-equity funds. Any role for technology firms could raise antitrust concerns. Even an intentionally inoffensive squad—perhaps including Walmart, a supermarket, and Oracle, a software firm, which came close to striking a deal in 2020—would probably find the Chinese government standing in the way of a sale.Mr Mnuchin’s background could also become a source of discomfort. As treasury secretary, he chaired the Committee on Foreign Investment in the United States, the country’s watchdog screening inbound investment, playing a crucial role in an earlier attempt by Mr Trump to force the divestment of TikTok. To some his acquisition of the social-media app would represent everything wrong with the revolving door. Others, especially those happy to keep using TikTok, would see it as mere swings and roundabouts. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More