Housing expert: ‘We can expect mortgage rates to go down’

guardianpub on January 16, 2023

Homebuyers may finally catch a break this year, says one expert, as signs of fading inflation could drive mortgage rates lower as soon as this month.

“Mortgage rates have declined by almost a full percentage point since they peaked in November,” told Melissa Cohn, vice president for William Raveis, a real estate brokerage firm. “I think that we can expect mortgage rates to go down another quarter or even as much as a half a percent over the course of the next month.”

The average interest rate on the 30-year fixed mortgage has fallen by three-quarters of a percentage point since mid-November, according to Freddie Mac, hitting 6.33% this week. The decline in rates comes after a series of government reports showed signs that inflation in the U.S. was finally cooling.

For some buyers, a mortgage rate drop means gaining back purchasing power and re-entering the market.

“It’s the beginning of 2023. Everyone is back to zero in terms of meeting their goals and everyone has to bring loans in the door,” Cohn said. “Banks are going to sharpen their pencils, they’re going to tighten up their margins, and do whatever they can to bring volume in the door and lower rates will bring more real estate transactions.”

Rates won’t drop to 3%

After roughly two years of record-low mortgage rates, the 30-year rate last year increased at their fastest clip in over 50 years. Most of the rate hikes were due to the Federal Reserve’s zealous fight against rampant consumer price growth.

However, signs of cooling inflation in recent months are increasing the likelihood that the Fed will reconsider its pace of hikes – giving mortgage rates a bit of relief. This week new data showed that consumer price growth had dropped to its lowest level in over a year.

Still, rates probably won’t return to levels seen during the early years of the pandemic.

“People can’t expect that we’re going to go back to a 3%, 30-year fixed rate,” Cohn said. “Now that happened because of COVID and the pandemic, and we don’t want to find ourselves in that position again. If we can get interest rates to go back to where they were pre-COVID, call that anywhere from 3.75% to 4.5%, that would be a home run.”

How to get the best interest rate

The combination of higher rates, climbing home prices, and inflation were a massive blow for plenty of first-time buyers last year, who were often priced out of the market.

While a rate drop can significantly boost your buying power, there are other ways you can improve your chances of snagging a lower rate. According to Cohn, the key is to start off early by improving your credit score.

“Many of the banks with better rates are going to want to see someone have three to four different active tradelines on their credit history,” she said, noting buyers should have sufficient money for the down payment plus extra. “We find a lot of first-time homebuyers getting stuck because they maybe have enough money for the down payment, but haven’t taken into consideration all of the closing costs and what you need to have for reserves.”

Another way to soften your rate is by considering an adjustable-rate mortgage or a government-backed home loan, which often carry lower interest rates and may be more accessible.

Finally, keep an eye on the demand in your area. Sellers have been more open to offering incentives, such as mortgage rate buy-downs, cash for closing costs, and even price reductions, so buyers still in the market should jump at those opportunities while they still can.

“When mortgage rates are higher, real estate prices tend to be a little bit softer,” Cohn said. “When interest rates do come dow … real estate prices will start to go back up again and there’ll be more competition for the homes on the market.”

Source: finance.yahoo.com

Bitcoin or gold? Beware the ‘malignant tumor,’ says ‘Black Swan’ guru Nassim Nicholas Taleb

guardianpub on January 9, 2023

Is Bitcoin or gold the better investment? Opinions vary widely, with billionaire crypto fan Mark Cuban favoring Bitcoin—and slamming gold—and Euro Pacific Capital CEO Peter Schiff going the other way.

Nassim Nicholas Taleb has some thoughts, too. This week the author of the 2010 New York Times bestseller The Black Swan—among the few who foresaw the 2007-2008 financial crisis—weighed in on the debate in an interview with the French weekly L’Express.

It’s safe to say Bitcoin, which has fallen more than 60% since the start of 2022, fails to impress him.

‘Technology comes and goes’

One problem with Bitcoin, he said, is that “we are not sure of the interests, mentalities and preferences of future generations. Technology comes and goes, gold stays, at least physically. Once neglected for a brief period, Bitcoin would necessarily collapse.”

What’s more, he said, “It cannot be expected that an entry on a register that requires active maintenance by interested and motivated people—this is how Bitcoin works—will retain its physical properties, a condition for monetary value, for any period of time.”

Asked about the origins of the “craze for cryptocurrencies,” he pointed to the low interest rates of the past 15 years.

“Lowering rates creates asset bubbles without necessarily helping the economy,” he said. “Capital no longer costs anything, risk-free returns on investment become too low, even negative, pushing people into speculation. We lose our sense of what a long-term investment is. It is the end of real finance.”

One of the results, he argued, was “malignant tumors like Bitcoin.”

The ‘everything bubble’

Taleb isn’t alone in noting the effects of what’s been dubbed the “everything bubble”—created by years of loose monetary policies from the Fed and other central banks following the Great Financial Crisis. As Fortune reported this week, the easy money era was filled with bulls—from crypto experts to hedge fund managers to economists and investment banks—who believed the good times would never end.

Interestingly, Taleb was supportive of Bitcoin early on. At the time, as he explained to L’Express, he was critical of then Fed chair Ben Bernanke.

Bernanke, he said, did not see the structural risks of the system before the 2008 crisis, and overreacted afterwards: “Instead of correcting debt and mitigating hidden risks, he covered them with a monetary policy that was only supposed to be transitory. I wrongly thought Bitcoin would be a bulwark against the distortions of this monetary policy.”

‘Manipulators and scammers’

Taleb also warned that “the crypto universe attracts manipulators and scammers.”

He’s certainly not alone there.

Coinbase CEO Brian Armstrong said at the a16z crypto Founder Summit in late November: “We have to kind of come to terms as an industry with the fact that, I think our industry is attracting a disproportionate share of fraudsters and scammers. And that’s really unfortunate. That doesn’t mean it’s representative of the whole industry.”

(Armstrong added it was “baffling” to him why FTX founder Sam Bankman-Fried wasn’t already in custody—a few weeks later, he was.)

Taleb tweeted this week that he’s been trolled and smeared for his crypto criticism, but that such attacks have been offset by the “many thank you messages for saving young people from Bitcoin.”

He shared a message in which a Twitter user said he almost bought Bitcoin but then started following Taleb’s thinking on it, writing, “I got why crypto is crap in theory. Then it went bust in practice. NNT saved my dad’s hard earned money.”

Meanwhile, many Bitcoin bulls remain bullish. Ark Invest CEO Cathie Wood recently reiterated her prediction that Bitcoin will hit $1 million by 2030—it’s now just below $17,000. She also argued Bankman-Fried didn’t like “transparent and decentralized” Bitcoin “because he couldn’t control it,” saying the FTX fiasco was caused by “opaque centralized players.”

As for Cuban, he said on Bill Maher’s Club Random podcast last month, “I want Bitcoin to go down a lot further so I can buy some more.”

Source: finance.yahoo.com

Active investing poised to be on the rise in 2023

guardianpub on December 28, 2022

As 2022 nears a wrap, a trend is emerging that’s expected to gain traction next year — actively managed investment strategies — along with a custom strategy for people who like the idea of investing in a basket of companies, but want more control of what they invest in.

Assets in direct indexing are expected to climb to $825 billion by 2026, from roughly $462 billion now, according to Cerulli Associates, a global research and consulting firm, based in Boston, Mass. That tops growth forecasts for exchange-traded funds, mutual funds and separately managed accounts.

Here’s what’s behind the developing shift: Many analysts foresee loads of volatility for stocks in 2023, particularly early in the year, and an overall flat return scenario for the entire year, given the combo of still-high inflation, Fed rate hikes, and a potential recession. And some folks want more control.

“It’s part of a much broader trend towards personalized portfolios,” told Tom O’Shea, director at Cerulli.

Direct-indexing enters the mainstream

Direct indexing lets investors cherry-pick which stocks to buy in a benchmark index instead of owning a fund that tracks a specific gauge like the S&P 500.

A hands-on approach allows for you to adjust for changing market conditions in a turn-on-the-dime manner, something that is not in the cards for investors in passively managed retirement portfolios that mimic the ups and downs of whichever index is being tracked.

“Direct indexing allows investors to buy the individual stocks in an index directly as opposed to owning a predetermined selection of stocks through a fund,” told Marguerita Cheng, a Certified Financial Planner and CEO at Blue Ocean Global Wealth, in Gaithersburg, Md. “Investors can customize their holdings to align with their risk tolerance and investment preferences.”

“But there are some cons,” Cheng added. “Direct indexing, for example, can be more expensive than passive investing and may cause clients to lose focus of their long-term financial goals and encourage more frequent trading.”

Plain vanilla index funds vs DIY

Investing in Steady Eddie index funds — balanced across stocks, such as the S&P 500 index, and fixed-income bond funds put on auto-pilot for months on end — has been standard advice for many individuals, particularly those socking away retirement funds.

The overarching idea is that it’s simpler and less expensive to buy an entire index that is computer-generated than it is to try to select individual stocks to buy and sell. And, generally speaking, you have a better chance of shaking off the slumps in the stock market if you simply stay the course. Moreover, trying to find the perfect time to invest is tricky and almost always a huge mistake.

For scores of retirement savers, however, that passive strategy has been hard to stomach this year as markets have been pummelled. With inflation not yet under control and the overall stock market still teetering–the S&P 500 index has fallen around 19% so far this year, it’s hard to fight back the urge to step in and tweak your accounts, especially if you’re nearing retirement.

“Firms that cater to do-it-yourself investors like Schwab, Vanguard, and Fidelity are rolling out these personalized products and what we’re seeing is there’s a lot of investors who like to own individual securities for a variety of reasons,” O’Shea said.

“The tax benefits are one reason these have appeal,” he said. “They’re not necessarily buying into a mutual fund that has embedded capital gains, for example. They’ll be able to customize their portfolio according to their taxes. And then other characteristics that they might find important. It could be risk, maybe a low volatility portfolio. It could also be ESG, which is increasingly becoming important, particularly to young people.”

A custom solution

This year, Fidelity, for example, launched customized index funds for do-it-yourself brokerage customers. To create a custom index, you pick a group of stocks that you want to invest in based on whatever theme you choose — say, clean energy stocks — then determine the percentage weighting of each investment and invest all those stocks in a single basket.

After a free trial, the service costs $4.99 per month. The custom baskets can be used in non-retirement brokerage accounts, including Health Savings Accounts (HSAs) as well as Traditional IRAs, Roth IRAs, and rollover IRAs. You can invest in up to 50 stocks and create as many baskets as you want.

“We knew investors wanted more than just basket trading; they want a simplified way to monitor and trade their customized portfolios with just one click, and trade securities using Fidelity’s real-time fractional shares engine,” Josh Krugman, senior vice president of brokerage at Fidelity, told Yahoo Money. “This new ability to invest in and customize portfolios built from Fidelity’s thematic models puts direct indexing capabilities into the hands of DIY retail investors.”

Yet, recent Cerulli surveys show that only 14% of financial advisors are aware of, and recommend, direct indexing solutions to clients. For now, these hands-on offerings are still a small slice of the overall mutual fund sandbox.

“For tax-deferred or tax-free retirement accounts, more control over taxes may not be as compelling as rebalancing can occur without incurring tax consequences,” Cheng said. “For taxable accounts, flexibility and control with regards to taxes and security selection can be beneficial depending on the client’s personal and financial circumstances.”

The case for a blended strategy

Passive investing, however, isn’t fading away, by any measure.

In 2021, passively managed index funds for the first time accounted for a greater share of the U.S. stock market than actively managed funds’ ownership, according to the Investment Company Institute’s 2022 Factbook. Passive funds accounted for 16% of the U.S. stock market at the end of 2021, compared with 14% held by active funds. A decade ago, active funds held 20% and passive ones, 8%.

“I don’t buy this idea of the end of passive investing for a minute,” told Daniel Wiener, chairman of Adviser Investments, in Newton, Mass. “I have not heard or read of a single person of any substance saying that the end of passive investing is nigh.”

Importantly, fees are low for pre-set index baskets of stocks and bonds.

In 2021, the average expense ratio of actively managed equity mutual funds was 0.68%, compared with average index equity mutual fund expense ratio of 0.06%, according to a report by the Investment Company Institute. Active management ETFs have an average expense ratio of 0.69%.

The passive approach of set and forget makes perfect sense, particularly if you’re investing for the long haul and aren’t hardwired to be a stock jockey. The batting averages also support passive investing.

Over the past 15 years, more than 70% of actively managed funds failed to outperform their comparison index in 38 of 39 categories, according to the S&P Dow Jones Indices (SPIVA) mid-year 2022 survey on the performance of active mutual fund managers.

Moreover, the S&P 500 has increased on average by 29% in the three years following a 20% plus decline dating back to 1950, according to data analysis by Truist chief market strategist Keith Lerner.

“It doesn’t hold water – if expectations are that returns will be lower in the years ahead then both passive and active funds with low expense ratios should be the preferred investment vehicles,” Wiener said. “So, T. Rowe Price, Vanguard, and Fidelity funds with low operating expenses, as well as low expense ratio ETFs, will remain the preferred investments.”

Source: finance.yahoo.com

401(k) and IRA Contributions: You Can Do Both

guardianpub on December 19, 2022

The Rules You Need to Know—Plus a Pitfall You’ll Want to Avoid.

Do you have a 401(k) plan through work? You can still contribute to a Roth IRA (individual retirement account) and/or traditional IRA as long as you meet the IRA’s eligibility requirements.

You might not be able to take a tax deduction for your traditional IRA contributions if you also have a 401(k), but that will not affect the amount you are allowed to contribute. In 2022, you can contribute up to $6,000, or $7,000 with a catch-up contribution for those 50 and over. In 2023, those amounts go up to $6,500 and $7,500.

It usually makes sense to contribute enough to your 401(k) account to get the maximum matching contribution from your employer. But adding an IRA to your retirement mix after that can provide you with more investment options and possibly lower fees than your 401(k) charges. A Roth IRA will also give you a source of tax-free income in retirement. Here are the rules you’ll need to know.

IRA Eligibility and Contribution Limits

The contribution limits for both traditional and Roth IRAs are $6,000 per year, plus a $1,000 catch-up contribution for those 50 and older, for tax year and 2022. In 2023, the limits are $6,500 for those under age 50 and $7,500 for those ages 50 and up.

You can split your contributions between different types of IRAs, for example by having both a traditional and a Roth IRA. But your total contribution cannot be higher than the limit for that year. Traditional and Roth IRAs also have some different rules regarding your contributions.

Traditional IRAs

Contributions to a traditional IRA are often tax-deductible. But if you are covered by a 401(k) or any other employer-sponsored plan, your modified adjusted gross income (MAGI) will determine how much of your contribution you can deduct, if any.

The following tables break it down:

IRS Publication 590-A explains how to calculate your deductible contribution if either you or your spouse is covered by a 401(k) plan.

Even if you don’t qualify for a deductible contribution, you can still benefit from the tax-deferred investment growth in an IRA by making a nondeductible contribution. If you do that, you will need to file IRS Form 8606 with your tax return for the year.

Roth IRAs

Roth IRAs provide no upfront tax benefit, and it doesn’t matter whether you have an employer plan. How much you can contribute, or whether you can contribute at all, is based on your tax-filing status and your income for the year.

This table shows the current income thresholds:

Spousal IRAs

You must have earned income to contribute to an IRA. However, there’s an exception for married couples where only one spouse works outside the home. That’s a spousal IRA. It allows the employed spouse to contribute to an IRA of a nonworking spouse and as much as double the family’s retirement savings. You can open a spousal IRA as either a traditional or a Roth account.

What if You Contribute Too Much?

If you discover that you contributed more to your IRA than you’re allowed, you’ll want to withdraw the amount of your overcontribution—and fast. Failure to do so in a timely way could leave you liable for a 6% excise tax every year on the amount that exceeds the limit.

The penalty is waived if you withdraw the money before you file your taxes for the year in which the contribution was made. You also need to calculate what your excess contributions earned while they were in the IRA and withdraw that amount from the account, as well.

The investment gain must also be included in your gross income for the year and taxed accordingly. What’s more, if you are under 59½, you’ll owe a 10% early withdrawal penalty on that amount.

Source: investopedia.com

History says the Fed can’t meet its inflation goal without a recession

guardianpub on December 16, 2022

Forget about a soft landing in 2023.

Should the Fed achieve its goal of reducing inflation, it’s all but guaranteeing a punishing recession next year caused by a rapidly deteriorating labor market.

As Myles Udland laid out in Thursday’s Morning Brief, Fed Chair Powell strained credulity at his latest press conference while attempting to make the case for a potential soft landing next year that sees inflation come down without the economy contracting.

Powell struggled to fit the FOMC’s own predictions about the economy next year into a narrative that avoids a hard landing — or recession.

Powell hammered home the strong job market and didn’t mince words when he said, “There’s an imbalance in the labor market between supply and demand,” noting that it will take a “substantial period” to get the labor market back in equilibrium.

At issue for the Fed has been inflation, which is currently running well above its 2% target.

In November, headline inflation as measured by the Consumer Price Index (CPI) came in at 7.1% over the prior year. In June of this year, inflation topped out north of 9%.

The Fed’s forecasts released on Wednesday showed inflation slowing next year as unemployment rises. But with inflation standing at 3.5% by year-end 2023, the Fed’s own projections show prices still rising at an unacceptable rate.

And as Alfonso “Alf” Peccatiello at The Macro Compass notes, one surefire way to bring down inflation is a recession.

Since 1960, every recession except the pandemic-induced downturn of 2020 kicked off with inflation running at 3.7% or hotter. And only in 1974 did the recession end with inflation higher than 2.7%.

Also at issue for Powell and the Fed is that despite insisting 0.5% GDP growth in 2023 offers evidence refuting recession suggestions inferred from their forecasts, the labor market outlook is less ambiguous.

The Sahm Rule is a relatively new Fed model which has correctly predicted the last nine recessions and done so much faster than they were officially declared in real time. The recession alert is triggered when the three-month moving average of the unemployment rate moves over 0.50% above its lowest low of the last 12 months.

The current 12-month low in unemployment is 3.5%. So if and when the 3-month average climbs above 4.0%, that would suggest the economy is already in recession.

Even if we mark this local low from November’s unemployment rate of 3.7% and move the Sahm Rule trigger to 4.2%, the Fed’s outlook still looks hairy. The Fed is predicting an unemployment rate of 4.6% by the end of next year, so it’s easy to see where the fault in the central bank’s argument lies.

But if we take Powell’s comments and the Fed’s forecasts together, we see any anti-recession arguments end up being mostly academic.

The goal for this Fed is to bring down inflation, and bring it down in a big way.

“Without price stability, the economy doesn’t work for anyone,” Powell said Wednesday.

“There will be some softening in labor market conditions,” Powell said. “And I wish there were a completely painless way to restore price stability. There isn’t. And this is the best we can do.”

Source: finance.yahoo.com

Gold slips as dollar firms to kick start major data week

guardianpub on December 12, 2022

Gold prices fell on Monday as the U.S. dollar firmed ahead of key inflation data, with investors awaiting the Federal Reserve policy meeting for more clues about its rate-hike stance.

Spot gold slipped 0.4% to $1,788.69 per ounce, as of 0714 GMT. U.S. gold futures were down 0.6% at $1,799.10.

The dollar index rose 0.3%. A stronger greenback makes dollar-priced bullion more expensive for overseas buyers. [USD]

“It’s a big week for markets with U.S. inflation and Fed meeting… We’ll see lower levels of volatility and fickle price action as investors become wary of front-running the events,” said Matt Simpson, a senior market analyst at City Index.

Tuesday’s U.S. Consumer Price Index (CPI) data and the Fed’s final meeting of 2022 scheduled on Dec. 13-14 will be keenly watched by investors.

Traders are pricing in a 93% chance of a 50-basis-point rate hike by the Fed.

“Gold could benefit if it’s a softer CPI as it would raise hopes of a less aggressive Fed… A slower (rate hike) trajectory should benefit gold and see it head for the $1,824 high,” Simpson added.

Lower rates tend to boost gold’s appeal as it decreases the opportunity cost of holding the non-yielding bullion.

U.S. producer prices rose slightly more than expected in November amid a jump in the costs of services, but the trend is moderating, with annual inflation at the factory gate posting its smallest increase in 1-1/2 years.

U.S. Treasury Secretary Janet Yellen on Sunday forecast a substantial reduction in U.S. inflation in 2023.

Additionally, the European Central Bank (ECB) and the Bank of England (BoE) are also set to announce rate hikes this week, as policymakers continue their battle against inflation.

Spot silver lost 0.2% to $23.42, platinum fell 0.6% to $1,016.16 and palladium ticked 1% lower to $1,931.07.

Source: reuters.com

Toyota Halts Car’s Sales and Production for U.S.

guardianpub on December 12, 2022

Toyota stops sales and production for this auto in the U.S. market.

Toyota is known for a lot of different things, mainly automobiles, but the company also makes sewing machines, forklifts, robotics, boats and even houses. Of course, the main line of business Toyota handles is automobiles.

While being a true leader in the automobile industry, Toyota has dealt with its own setbacks. Toyota launched a subsidiary car brand Scion in 2003 to try to capture a younger buyer’s market, but in the end, Toyota decided that it did not need an entire separate brand to bring in younger customers, and that was the end of the Scion in 2016.

James Jacobs with HotCars.com lists the most notable models that Toyota has discontinued like the Toyota FJ Cruiser, a replacement of the Land Cruiser. While Toyota still makes the FJ Cruiser, it is not available in the U.S., but it is available in Australia. Toyota also dropped the Venza, citing poor sales performance among other reasons. Other models discontinued by Toyota include the Supra, Cresta, 2000GT, Soarer, Celica, MR-2, Solara, and the Carina.

Pulling the Plug on the C-HR

Failure is just a part of doing business. Knowing when to pull the plug is also part of business. Toyota debuted the Compact High Rider or Cross Hatch Run-about C-HR, a compact crossover SUV in 2016. The car was available in an all-wheel drive and a front wheel drive. Toyota sold the C-HR in Europe, Japan, Australia, South Africa, China, Taiwan, Southeast Asia, and North America.

According to CarandDriver.com, Toyota is pulling the plug on selling the Toyota C-HR in the U.S. and Canada as it ends production for North America in 2022. While you won’t be able to get the Toyota C-HR in North American, it will still be sold in Europe.

Not To Be Replaced

“Effective following the 2022 model year, Toyota will discontinue sales of the C-HR in the U.S. and Canada,” Toyota said in a statement sent to MotorTrend.com regarding the elimination of the C-HR. “We are constantly evaluating our product lineup and we remain committed to the compact SUV segment. With the recent introduction of the Corolla Cross and Corolla Cross Hybrid, two great products that offer a great combination of utility and efficiency, and the best-selling RAV4, we are providing multiple options for compact SUV buyers.”

The C-HR is kind of a different beast all together, as it’s not a coupe, it’s not an SUV and it’s not a hatchback. What’s for certain is that it was not popular enough to be sold in the U.S. The Toyota Corolla Cross is the best option in the U.S. for a hybrid mix of not quite an SUV, not quite a hatchback. The Toyota Rav-4 is also still available, but that is much bigger than the smaller hybrid cars out there.

MotorTrend also said that the end of the Toyota C-HR also brings the end to the Scion chapter. VehicleHistory.com’s William Byrd stated that Scion brand allowed Toyota to innovate and create without feeling the pressure of being in the Toyota line up. The pressure to deliver value, reliability and style to the masses was not on Scion, as it was a unique car brand trying to allow consumers a chance to drive their individuality on the roads. Oddly enough, Byrd remarked that while Scion was supposed to market to the younger generation, most of the current owners of the Scion brand are much older than the original target audience.

Source: thestreet.com

Meta Oversight Board calls for overhaul of controversial ‘cross-check’ system for VIPs

guardianpub on December 6, 2022

Meta Platforms’ Oversight Board recommended on Tuesday that the company revamp its system exempting high-profile users from its rules, saying the practice privileged the powerful and allowed business interests to influence content decisions.

The arrangement, called cross-check, adds a layer of enforcement review for millions of Facebook and Instagram accounts belonging to celebrities, politicians and other influential users, allowing them extra leeway to post content that violates the company’s policies.

Cross-check “prioritizes users of commercial value to Meta and as structured does not meet Meta’s human rights responsibilities and company values,” Oversight Board director Thomas Hughes said in a statement announcing the decision.

The board had been reviewing the cross-check program since last year, when whistleblower Frances Haugen exposed the extent of the system by leaking internal company documents to the Wall Street Journal.

Those documents revealed that the program was both larger and more forgiving of influential users than Meta had previously told the Oversight Board, which is funded by the company through a trust and operates independently.

Without controls on eligibility or governance, cross-check sprawled to include nearly anyone with a substantial online following, although even with millions of members it represents a tiny slice of Meta’s 3.7 billion total users.

In 2019, the system blocked the company’s moderators from removing nude photos of a woman posted by Brazilian soccer star Neymar, even though the post violated Meta’s rules against “nonconsensual intimate imagery,” according to the WSJ report.

The board at the time of the report rebuked Meta for not being “fully forthcoming” in its disclosures about cross-check.

In the opinion it issued on Tuesday, the board said it agreed that Meta needed mechanisms to address enforcement mistakes, given the extraordinary volume of user-generated content the company moderates each day.

However, it added, Meta “has a responsibility to address these larger problems in ways that benefit all users and not just a select few.”

It made 32 recommendations that it said would structure the program more equitably, including transparency requirements, audits of the system’s impact and a more systematic approach to eligibility.

State actors, it said, should continue to be eligible for inclusion in the program, but based only on publicly available criteria, with no other special preferences.

The Oversight Board’s policy recommendations are not binding, but Meta is required to respond to them, normally within 60 days.

A spokeswoman for the Oversight Board said the company had asked for and received an extension in this case, so it would have 90 days to respond.

Source: reuters.com