Washington Extra – Chickens come home to roost
Curses are like young chicken: they always come home to roost, to quote the title page of Robert Southey’s poem The Curse of Kehama, published in 1810.
The controversy over the handling of home foreclosures came back to hurt the nation’s biggest banks with a vengeance today. There may not be a lot of sympathy on Wall Street for people who missed their mortgage payments, but then again, there probably isn’t much sympathy on Main Street for the practice of “robo-signers” to approve home seizures, especially since banks probably shouldn’t have extended many of the defaulting mortgages in the first place.
Investors have no room for sentiment either way. They dumped bank stocks on fears a prolonged investigation into potentially shoddy foreclosures, one of the biggest legal probes of the mortgage industry in decades, will eat into profits. The fear: it will delay sales of bank-owned properties, draw fines from regulators, and spawn lawsuits from both homeowners and investors in mortgage-backed securities. Jamie Dimon of JP Morgan admitted it could slow down the recovery in the housing market, but said “we’re hoping it won’t kill it.”
On election watch, an interesting story on why the Afghan war is just not an issue for most voters, and another from Ohio about Democrats’ efforts to substitute organization for enthusiasm. Democratic strategist Chris Kofnis underlined what he called “the brutal reality” for his party. “Either we close the so-called enthusiasm gap before election day, or its going to be a really bad election day.”
There wasn’t much enthusiasm, though, when President Barack Obama held a televised “conversation” with an audience of young people. The brutal reality? We all know Obama’s ratings have fallen, but it was still striking how all that energy around “hope” and “change” had dissipated.
Finally, watch out on Friday for an expected announcement from the Treasury over whether to name China a currency manipulator. Political pressure is growing ahead of the elections, and the administration has been taking a tougher line with China, but on balance it still seems unlikely it will risk widening the rift with the largest U.S. creditor.
Here are our top stories from Washington today…
In election, Afghan war not on voters’ mind
Nine years into one of the longest wars in U.S. history, conflict-weary Americans are on the verge of electing a new Congress with barely a whisper of debate about the ongoing struggle in Afghanistan. A Reuters/Ipsos poll found that Americans rated Afghanistan bottom of a list of seven issues that Congress should deal with in 2011.
For more of this story by David Alexander and John Whitesides, read here.
Democrats hope organization beats enthusiasm
While his neighbors relax after work, Steve Shucard hunches over a laptop computer at his kitchen table, dialing for votes. Most of the calls to Ohio voters are wrong numbers, hang-ups or go unanswered. But once in a while, Shucard hits pay dirt — someone who pledges to support Ted Strickland for governor. Calls and door-to-door surveys by volunteers are the backbone of a get-out-the-vote effort Democrats hope will limit their losses and counter a pronounced Republican advantage in enthusiasm for the November elections.
For more of this story by John Whitesides, read here.
Bank shares hit by U.S. foreclosure woes
Growing concerns over the handling of home foreclosures hit bank shares hard, with analysts warning of harm to the fragile housing market and broader economy if the issue escalates. All 50 states have started a joint investigation of the mortgage industry, focusing on allegations that some banks did not review documents properly or submitted false statements to evict delinquent borrowers.
For more of this story by Dave Clarke and Steve Eder, read here.
For a factbox on snowballing foreclosure problems, click here.
Wall St blames homeowners in foreclosure fiasco
Wall Street’s reaction to the allegations that some banks cut corners while foreclosing on 3 million homes since 2007: Pay your mortgage in the first place. “If you didn’t pay your mortgage, you shouldn’t be in your house. Period. People are getting upset about something that’s just procedural.” said Walter Todd, portfolio manager at Greenwood Capital Associates.
For more of this story by Joe Rauch, read here.
For a graphic on foreclosures around the country, click here.
US mulls calling China currency manipulator
The Obama administration is due to say on Friday whether it believes China manipulates its currency for an unfair trade advantage, a decision that could sour ties between the world’s two biggest economies. Read on for three options the administration could pursue and a look at the potential implications of each.
For more of this story, read here.
US state wealth tax vote shadows nationwide debate
A vote 3,000 miles from the District over tax rates, pitting the likes of Amazon’s Jeff Bezos against Microsoft founder Bill Gates’ father, shadows a wider national debate over how much the wealthy should pay. Voters will decide whether to approve Washington state’s first-ever state income tax in a ballot proposal as part of the November elections.
For more of this story by Kim Dixon, read here.
Jobless claims point to further Fed easing
New claims for jobless benefits unexpectedly rose last week, hardening the view the central bank will pump more money into the economy. The weak economic data kept the pressure on Democrats, who look likely to lose control of the House of Representatives in November, a Reuters-Ipsos poll projected.
For more of this story by Corbett Daly and Doug Palmer, read here.
Judge asked to stay ruling on US military gay ban
The Obama administration asked a federal judge to stay a ruling that would end the ban on openly gay men and women serving in the military after officials warned the injunction could undermine a Defense Department review of the “don’t ask, don’t tell” policy. “The precipitous changes to military policy required by the court’s injunction would result in a host of significant and immediate harms to the recognized public interest in ensuring that the nation has strong and effective military operations,” the administration said.
For more of this story, read here.
What we are blogging…
What will Obama 2.0 look like? President Barack Obama has given little hint of a major shift in his governing strategy following the midterm elections on Nov. 2, but Peter Baker’s piece in the New York Times magazine suggests changes are in the works. But it’s not clear how far-reaching they will be.
For Caren Bohan’s full post, click here.
For more stories from our Washington correspondents visit www.reuters.com and stay informed.
Photo Credit: REUTERS/Jim Bourg (Josephine Diaz (front) of Chicago and Christopher Gales (rear) of Washington chant as advocates of homeowners and people facing foreclosure protest outside the U.S. Treasury Department , Nov. 18, 2009)