Washington Extra – A moratorium on moratoriums
It’s official. Moratoriums are out (as are moratoria if you prefer the Latin plural). On the day the White House rejected calls for a nationwide moratorium on home foreclosures, it also lifted its own moratorium on deepwater drilling for oil and gas. Some Democrats, especially those like Harry Reid facing tough election races in November, had been calling for a foreclosure ban. But President Barack Obama, who doesn’t face voters directly for a couple more years, has accepted the longer-term argument that a broad halt to evictions would slow a recovery in the housing market and the economy.
Nevertheless, the scandal over how banks and other companies processed foreclosure documents and the uncertainty surrounding it is going to hang over the market, especially with 40 state attorneys general (many of whom are up for re-election) expected to announce their own investigation into the issue.
Obama, of course, rejected a similar economic argument when he imposed the deepwater drilling ban back in May, this time for the greater environmental good. Now, the White House says it can lift the ban on drilling because stricter rules are in place to prevent a repeat of BP’s massive spill in the Gulf of Mexico. Again, even without the ban, the drilling business will be slow to bounce back as companies adapt to the new safeguards.
As usual, some will blame Obama for hobbling business with excessive regulation. Others will say that unfettered business was exactly what led to the financial crisis and the oil spill. The choice is yours on November 2.
Talking of choices, the voters of Wisconsin seem almost ready to make theirs. According to our latest Reuters/Ipsos poll, veteran Democratic Senator Russ Feingold is trailing his Republican challenger Ron Johnson by seven points. Interestingly, it is not so much Feingold’s vote for healthcare legislation that has hurt him (as some have suggested) but his failure to create enough jobs, the poll found.
Finally today, and while we are on the subject of regulation, our poll of financial analysts, money managers and trading firms found surprisingly little support for the idea of scrapping the Dodd-Frank financial reform law. Just three of the 53 respondents put that among their top two priorities for the next Congress, with extending tax cuts and lifting growth topping the list. But then, maybe they are hoping the courts will do their work for them. TCF Financial Corp filed a lawsuit today against a section of Dodd-Frank, while the Chamber of Commerce is planning more legal challenges after winning Round One against the Securities and Exchange Commission earlier this month.
Here are our top stories from Washington today…
Senator Feingold struggles in Wisconsin
Veteran Democratic Senator Russ Feingold is struggling in his bid for re-election in Wisconsin, due in part to concerns about his ability to help create jobs, a Reuters-Ipsos poll found. Feingold, bidding for a fourth term, had long been seen as a safe incumbent, but a weak U.S. economy has generated doubts about him and other Democrats. Wisconsin is one of a dozen crucial races in the fight over control of the Senate.
For more of this story by Steve Holland, read here.
White House rejects foreclosure moratorium
The Obama administration rejected calls for a nationwide moratorium on housing foreclosures amid fears that such a move could cripple recovery of the housing market. A moratorium would help people on the brink of losing their homes, but industry experts warn it would create a backlog of homes that would later come to the market, depressing prices and further hobbling the economy.
For more of this story by Corbett B. Daly and Caren Bohan, read here.
U.S. ends deepwater drilling ban, sets new rules
The Obama administration lifted its deepwater drilling ban seven weeks ahead of schedule, saying new rules cut the risk of a repeat of the BP spill. The Interior Department said oil companies must comply with new regulations and demonstrate they can adequately respond to blowouts.
For more of this story by Ayesha Rascoe, read here.
Wall Street stresses jobs, taxes after election
Wall Street is more worried about high unemployment than the makeup of Congress or the Federal Reserve’s next move. That said, extending tax cuts and lifting growth should be the top priorities of the new Congress, according to a poll of 53 financial analysts, money managers and trading firms.
For more of this story by Edward Krudy, read here.
To view the poll results, click here.
Markets pricing in split Congress, gains under GOP
This November, the bulls are looking for elephants. Republican control of at least the House of Representatives after the mid-term elections could increase the prospect of legislative gridlock and push stock prices higher. According to a Reuters poll, a majority of analysts expect a Republican takeover of at least one chamber will result in near-term equity gains.
For more of this story by Ryan Vlastelica, read here.
For a graphic on markets and mid-term elections, click here.
Elections could pressure Pentagon spending
Significant Republican gains in November elections could fuel pressure to cut weapons funding despite a huge push by top Pentagon officials to keep the defense budget stable. “The grim reality is that the midterm elections are going to have a significant impact in terms of accelerating the contraction in defense funding,” said Jim McAleese, a Virginia-based defense consultant.
For more of this story by Andrea Shalal-Esa, read here.
Scenarios: Possible permutations in Congress vote
The November 2 elections are likely to put a lot more Republicans in Congress, but it’s uncertain if Republicans will win control of either house — or if Democrats will stun the nation and hang on to both chambers.
For more on how votes in Congress might be divvied up and the implications, read here.
TCF Financial sues over U.S. financial reform law
Financial reform is facing another legal challenge in a sign that the courts could become an increasingly important battleground over how the industry is regulated. TCF Financial Corp said its banking unit is challenging a section that limits the fees banks can receive when their debit cards are used. “The statute makes no more sense than regulating the price of a Burger King hamburger solely to the costs of the meat and the bun,” TCF Chief Executive Officer William Cooper said on a conference call.
For more of this story by Dave Clarke and Dena Aubin, read here.
Bosnia must catch up to join Europe: Clinton
Secretary of State Hillary Clinton warned Bosnia it must catch up to its neighbors and integrate with Europe, saying it was time for the country to unite to deliver the promise of 1995 peace accords. “Hatreds have eased, but nationalism persists. Meanwhile, the promise of greater stability and opportunity, represented by integration into Europe, remains out of reach,” Clinton said.
For more of this story by Andrew Quinn and Daria Sito-Sucic, read here.
What we are blogging…
Bachmann says her “high-profile” congressional race targeted by top Democrats
Michele Bachmann, who started the “Tea Party Caucus” in the House of Representatives this summer, says her “high-profile” congressional race is being targeted by some very high-profile Democrats. “I’ve been one of Speaker Pelosi’s top targets to defeat this fall,” Bachmann said on NBC’s “Today” show. ”President Clinton came in, he was campaigning against me. In a couple of weeks Speaker Pelosi will be in Minnesota as will President Obama. Mine is a very high-profile race, and she’s trying to do everything she can to defeat me.”
For Tabassum Zakaria’s full post, click here.
Quake relief iGame aims to raise aid work awareness
An earthquake measuring 8.2 on the Richter scale strikes a densely-populated island in the Atlantic, killing and injuring thousands. How would you save lives? That’s the premise of a game application for the iPhone, iPad and iPod devices by the Australian branch of child rights group Save the Children that aims to give players a sense of what aid work is really about.
For more of this story, read here.
For more stories from our Washington correspondents visit www.reuters.com and stay informed.
Photo Credit: REUTERS/Dan Anderson (A rig helps drill a relief well at the site of the Deepwater Horizon oil spill in the Gulf of Mexico)