Washington Extra – homing in on the American dream

August 17, 2010

Sounds like people had plenty to say about the future of Fannie Mae and Freddie Mac at a Treasury forum today. For example, Bill Gross of PIMCO, who oversees more than $1 trillion in assets, called for a massive program to refinance mortgages at low rates as a way to lift the economy – a more sweeping recommendation than Treasury organizers had anticipated. “It is not tenable to leave in place the system we have today,” Treasury Secretary Timothy Geithner acknowledged, but said the government must still have some role. USA-HOUSING/

The bailed-out mortgage giants have received nearly $150 billion in taxpayer funds since they were placed in government conservatorship, and are likely to need tens of billions of dollars more to survive.

A new Reuters/Ipsos poll on the Kentucky Senate race shows Republican Rand Paul, a Tea Party favorite, with a narrow 5 point lead over Democrat Jack Conway among likely voters. The poll also probed voter views on the controversy about Paul’s alleged college pranks, and found that 53 percent of Kentucky voters had not heard anything about it. Among Republicans, 12 percent said the stories made them more likely to vote for Paul.

And if you haven’t seen it yet, check out our blog for a rap video promoting Elizabeth Warren to become the new consumer sheriff in town…

Here are our top stories from today:

Obama seeks new design for housing, Fannie/Freddie

The Obama administration called for “fundamental change” at Fannie Mae and Freddie Mac, but a long, politically explosive debate lies ahead on the future of the bailed-out mortgage giants and housing policy that affects millions of Americans and billions in investment. Treasury Secretary Timothy Geithner raised basic questions about the government’s long-standing role in subsidizing the $10.7 trillion housing market and supporting the historic “American dream” of home ownership.

For the full story by Kevin Drawbaugh and David Lawder read here.

Republican Paul leads Senate race in Kentucky

Republican Rand Paul, a favorite of the conservative Tea Party movement, has a narrow lead among likely voters in a Senate race in Kentucky, where economic worries top voters’ concerns, a Reuters/Ipsos poll said. Paul leads state attorney general Democrat Jack Conway by 45 percent to 40 percent among likely voters in the November 2 election. In a broader pool of registered voters, the two are deadlocked at 40 percent.

For the full story by John Whitesides, read here.

Home builders still struggling in July

Home building increased at a much weaker pace than expected in July, though sturdy growth in industrial output implied the embattled economy has enough strength to keep growing.

For the full story by Lucia Mutikani, read here.

FDA staff question wider use of Lilly’s Cymbalta

Government scientists raised safety concerns about using Eli Lilly and Co’s blockbuster antidepressant Cymbalta to treat pain, also noting that approval of the new use would likely cause “a substantial increase” in prescriptions among the wider population. Food and Drug Administration staff, in documents released on the agency’s website, said they would ask a panel of outside advisers about the potential for liver toxicity and whether broadening use of the drug would be appropriate.

For the full story by Susan Heavey, read here.

Top stories from Reuters Insider…

Pimco’s Bill Gross: government must continue to back mortgages

Pimco’s Bill Gross says he will stop buying mortgage debt if it doesn’t come with an explicit government guarantee, and a private housing agency would result in unaffordable mortgage rates.

To watch the full interview, click here.

Wells Fargo co-president stresses lender roles in mortgages

Lenders need to take on greater responsibility when it comes to issuing and monitoring mortgage loans, according to Mike Heid, co-president of Wells Fargo Home Mortgage.

To watch the full interview, click here.

What we are blogging…

Democrats disagree on NY mosque, White House says no problem

Barack Obama and Harry Reid agree on most things. They both favored stimulus measures to boost the economy. They both want climate change and comprehensive immigration reform to pass the Senate — at least someday. But the president and the top Democrat in the Senate disagree about an issue that could become a flashpoint in the November elections: whether or not a Muslim cultural center in New York should be built near the site of the Sept. 11 attacks.

To read Jeff Mason’s full blog, click here.

Elizabeth Warren’s rap video

Consumer advocate Elizabeth Warren is among a handful of candidates President Barack Obama is considering to become the first chief of the Consumer Financial Protection Bureau. Some ardent supporters clearly think the Harvard law professor (and chief of a panel monitoring the government’s $700 billion bailout of the financial system) is up for the task of heading the independent agency created under the financial reform bill signed into law last month.

To read JoAnne Allen’s full blog, click here.

Photo credit: Reuters/Jason Reed (Geithner at housing finance conference)

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