Washington Extra – Just “okay”
It was a long slog to the government’s mortgage abuse settlement with top banks, one in which officials slept in their offices and worked round the clock. And yet, a consumer advocate looking out for those who lost homes to foreclosure can only muster an “it’s okay.”
You don’t need an expert to tell you how little of a dent the $25 billion deal makes in a mortgage morass that President Obama reminded us is one of the biggest drags on the economy. It took 16 months to get to a settlement that helps roughly 1 million borrowers, while 11 million Americans owe more money that what their homes are worth. People who lost their homes to foreclosures will get payments of $2,000. Home prices, meanwhile, are still 33 percent lower than 2006.
It’s a lot of work for a little relief. But if there is one constituent that walks away satisfied it has to be the state of California. Attorney General Kamala Harris held out for a better deal right to the end. What she won was 45 percent of the settlement spoils, and she only came to the table with a third of the nation’s foreclosures in her portfolio. It pays to play hard to get.
Here are our top stories from Washington…
from Summit Notebook:
ABA’s Yingling sees danger in rhetoric: it’s Wall Street, not banks
Ed Yingling, president and CEO of the American Bankers Association, is a little worried about the rhetoric that's been flying around as Congress tries to produce financial reform legislation.
And he wants people to be clear that the problems are with Wall Street, not banks.
Though, the differentiation gets a little tricky here because some of the largest banks in the country and biggest players on Wall Street are members of his organization and received taxpayer bailouts. The thousands of other banks that his trade association represents did not.
"The general tone has I think been harmful, particularly to the banks we represent," Yingling said at the Reuters Global Financial Regulation Summit 2010.
But at least one key person got it right -- President Barack Obama in his speech on "Wall Street Reform" last week, Yingling said.
"He never used the term bank in any pejorative sense," he said. "He used it in a factual sense."
"It was clear that they realized that they need to differentiate between banks and Wall Street activities," he said.
Warren sees dark times if financial reform fails
Elizabeth Warren paints a disturbing picture of the realities facing the United States and the Obama administration as Americans claw their way clear of the worst recession since the 1930s.
Lobbyists for the financial industry have put the kibosh on market reforms that would aid the recovery. Banks, saved from Tartarus by taxpayer money, are using a free government guarantee against failure to rebuild profits and credit ratings, while either not lending to business or trying to milk American consumers of every dime they’ve still got.
“That’s our plan to rebuild the American economy. Think about it,” says the bespectacled Harvard professor who chairs the Congressional Oversight Panel set up to investigate the $700 billion banking bailout.
“What the government is doing right now is, it’s permitting a set of rules that says, in effect: ‘Hey, banks. We will lend to you at zero and you go out there and figure out what you can squeeze out of every American family. No new rules’,” she told MSNBC.
Why have the rules not changed? “There are very powerful interests that believe that they can profit from keeping status quo.”
Warren is seen as a front-runner to head President Barack Obama’s proposed Consumer Financial Protection Agency. But the notion of a free-standing CFPA has emerged as a main obstacle to broader financial reform. Republicans fear such an institution could fall into the hands of people hostile to financial markets.
No question we are doomed without true financial reform. Efforts to date have been laughable. The time to clean up Washington has come. No more lobbyists. No more career politicians; the greater good is not being served.
First Draft: Jobs, jobs, jobs
Today, as ever, it’s all about jobs. War, pestilence (in the form of the H1N1 flu), a big gas explosion at a shopping mall outside Washington, the re-opening of the Statue of Liberty’s crown – all these take a back seat to jobs, especially in a recession. And especially after this week’s “stress test” results for banks, when the unemployed might well be asking, “OK, the big banks got their bailout. Where’s ours?”
The latest jobless numbers offered some signs of relief: U.S. employers cut 539,000 jobs in April, thousands fewer than the 590,000 jobs analysts predicted. But the unemployment rate rose to 8.9 percent from 8.5 percent in March, the highest in more than a quarter-century.
President Barack Obama is largely out of sight today, but is due to emerge for a late-morning speech on job creation and job training.
That’s clearly the administration’s theme for the day. When Interior Secretary Ken Salazar traveled to New York Harbor for a televised appearance inside the crown of the Statue of Liberty, to announce the crown will open to the public on July 4, he played up the job-creation angle.
“This Statue of Liberty really is about hope and optimism for America,” Salazar told NBC’s “Today” program. “It’s also about jobs that come with tourism all over this country and it’s about President Obama’s agenda …”
Regular Reuters readers already figured the Statue of Liberty’s crown would open on Independence Day, because Salazar told correspondent Jasmin Melvin that this was possible in an interview on March 24.
Photo credit: REUTERS/Joshua Lott (The Statue of Liberty is seen as a woman sits on a bench and another walks by in New York, March 5, 2008.)
there were 100 000 thousand temporary jobs created by the government to help with the census ,that made the figures look better than they were.employment is still getting worse,the Uaw running chrysler and possibly GM this is an indication of the doctrinaire policies of this government.the only glimmer of common sense is obamas cabinet going after tax cheats,they will have a good insight to the various dodges because they have tried them.
The First Draft: Details
The devil’s in the details, the saying goes, and we’ll find out plenty of details today about two big initiatives of the Obama administration: the budget and the bank bailout.
At 10:35 a.m., Obama will propose slashing $17 billion from the U.S. budget in 121 programs ranging from weapons systems to mine cleanup. Republicans are likely to say that’s not enough to tame his $3.55 trillion budget.
At 5 p.m., the Treasury Department will reveal the results of its “stress tests” of major banks, and is expected to say that about half of the 19 largest banks will need to raise more money to stay financially should.
Aside from that, there’s plenty of other things happening in Washington today.
Russian Foreign Minister Sergei Lavrov is in town; he holds a news conference with Secretary of State Hillary Clinton at 1 p.m. and meets with Obama at 4:15.
Pakistani President Asif Ali Zardari and Afghan President Hamid Karzai are still kicking around as well. They hold a news conference with Richard Holbrooke, U.S. special representative for Afghanistan and Pakistan and Senator John Kerry at 2:30 p.m.
Finally, Rev. Al Sharpton, New York City Mayor Michael Bloomberg, and former House Speaker Newt Gingrich walk into a room. Sounds like the beginning to a tasteless joke, right? They’re actually meeting with Obama to discuss education reform this afternoon, and will talk to reporters about the meeting at 1:30.
First draft: Talking to Afghans, Pakistanis
President Barack Obama will jump into the thorny issue of Afghan-Pakistani relations today as he meets with President Hamid Karzai of Afghanistan and Pakistan President Asif Ali Zardari.
The visiting leaders will meet with Secretary of State Hillary Clinton before heading over to the White House where they will have separate meetings with Obama and Vice President Biden before a trialateral gathering.
Though the administration has doubts about the capability of both men, Obama is expected to urge Karzai and Zardari to put aside a history of mistrust and join Washington in an alliance against Islamic extremists.
On the economic front, regulators have told Bank of America it needs $34 billion of capital to withstand a deep economic downturn while Citigroup may need as much as $10 billion. The Obama administration is due to release results of the bank stress tests late onThursday but sources say about 10 of the 19 big U.S. banks being tested are likely to need more capital.
The morning television shows were very interested in former presidential candidate John Edwards — or more specifically, his wife Elizabeth. She has just written a new book and was on Oprah talking about her husband’s infidelity. She is due to give more TV interviews next week.
For more Reuters political news, click here.
Photo credits: REUTERS/Yuri Gripas (Karzai speaks in Washington); REUTERS/Yuriko Nakao (Zardari speaks in Tokyo last month)
I realize the importance of foreign diplomacy but not to the extent that billions of tax dollars are spent overseas to support foreigners. If that is necessary, that the United Nations should shoulder the cost, not the US taxpayer. We have given and helped all over the world yet we still get 9/11 and our own citizens still go to bed hungry and our disabled are routinely denied Social Security and live below the poverty level. I have e-mailed our elected for years about this, and Senator Cornyn did respond, stating that foreign aid is only 1% of the budget. I consider that a sarcastic reply and say that if people in America are in need, than even 1% is far too much.
Obama looks to end banks’ role in federal student loans
Poor bankers. Just as they’re catching flak for everything from the global financial crisis to high credit card interest rates, along comes the president and adds another grievance. Barack Obama, it seems, thinks using banks to dole out federal college loan funds is a waste of taxpayer money. So on Friday he discussed his scheme to boost the flow of federal dollars to those looking to get a higher education. To pay for it, he said, “we’re going to eliminate waste, reduce inefficiency and cut what we don’t need to pay for what we do.” Look out banks. Obama said there are two kinds of federal education loans — direct loans and Federal Family Education Loans. Under direct loans, tax dollars go directly to help students pay for tuition, “not to pad the profits of private lenders,” he said. But under the FFEL program, “taxpayers are paying banks a premium to act as middlemen — a premium that costs the American people billions of dollars each year,” he added.The loans are federally backed, so the banks don’t even have to take on significant risk. Cutting out the middleman, Obama said, could save the government tens of billions of dollars that it could use to help more students. But making that change won’t be easy, he said. ”The banks and the lenders who have reaped a windfall from these subsidies have mobilized an army of lobbyists to try to keep things the way they are.” ”They are gearing up for battle. So am I,” Obama said. “For those who care about America’s future, this is a battle we can’t afford to lose. For more Reuters political news, click here.Photo credit: Reuters/Larry Downing (President Obama discusses federal education programs in front of a portrait of George Washington)
It seems like every year my studen loans get sold to another bank. They turn around and charge me $2,000 dollars for their services. I pay about $3,200 dollars a year towards my loans. There’s always some idiot at the bank that tries to get me to consolidate my one loan to extend it for another 20 years. My loans have been sitting at $16k for the last 16 years because of this problem. I hope that Obama’s plan go through one day, because if anyone needs it…it’s me.
First Draft: Afghan plan
President Barack Obama to announce plan to send more troops to Afghanistan to help stabilize the country after Democrats for years criticized his predecessor, George W. Bush, of ignoring that war because of Iraq.
But the plan won’t overshadow White House focus on U.S. economic issues always lurking in the wings.
Obama to meet with bankers and talk about regulation. Sort of like a doctor meeting with a patient and talking about medicine that is not going to be very pleasant.
Red River rising forced parts of Fargo, North Dakota, to be evacuated.
Even with the dire economic times, Spring still manages to bloom. Washington’s annual homage to new beginnings, the Cherry Blossom Festival, starts this weekend.
Happy Friday.
There will be no meaningful draw down of U.S. military presence in Iraq. Troop levels will be increased in fossil rich Afghanistan. Securing crude oil and natural gas is crucial for the U.S. economy in the absence of any substantive and large energy plan at home. The destabilization of Pakistan looms ominously potentially making their nuclear arsenal available to those who would use it to confront U.S. hegemony in the region. Conflict appears unavoidable.
Focusing on the global banking system ills in an attempt to prevent this recession from becoming a depression, will probably yield few results as there is no global consensus on implementing regulatory and fiscal policy amongst nations. Precious time is running out. Free markets will not solve the troubles facing humanity. The key to solving the many crisis’ facing civilization is implementing the sustainable use of resources. The alternative will be war. Tremendous amounts of treasure and human capital will be expended in armed conflict. That cost would be better spent making all nation energy independent. In the bargain we might might avert war as we are no longer concerned with other peoples resources and keep Earth inhabitable too.
Bold budget boosts bailout
How do you buy $750 billion of toxic bank assets with only $250 billion of taxpayer money?
If you know to play U.S. budget rules like a violin.
President Barack Obama told Congress in passing this week he might need more money than lawmakers have already approved to stabilize banks and pull the economy out of the ditch.
How much? His budget virtuoso Peter Orszag said on Thursday he could support buying up to $750 billion in bad assets but only needed to set aside $250 billion to do it.
Regular US budget rules assume government credit subsidies will recoup some of their value. Appropriators budget for such items according to how much they think the government will lose — not the full amount of the credit.
Orszag explained his thinking on Thursday:
“Honest budgeting suggests, when you pay a dollar for a financial asset, that doesn’t make the government worse off by a dollar,” he said at a news conference. “It’s not the same thing as a net cost of a dollar, because you are getting something in exchange for it.”
Americans deserve this hell. We had a chance to nominate and elect a great leader. But we chose an inexperienced guy who gives great speeches. Guess what? This guy is so clueless about finance and money, he has to hire a Wall Street goon to decipher it for him.
I listened to this great leader, and his wise words have prevented me from losing any money in this entire debacle.
Pssh.
hint: Ron Paul
Fed Chair: No Night of Living Dead Banks
They won’t stay dead!
Members of the U.S. Senate grilled Federal Reserve Chairman Ben Bernanke on Tuesday on whether the next gruesome episode in the U.S. economic horror show could include an appearance of “zombie” banks.
During Japan’s economic stagnation in the 1990s, the government propped up failing banks and firms that came to be known as zombies. The failure to let such institutions expire prolonged Japan’s agony, many analysts believe.
Now that the U.S. government is struggling to keep the banking system alive, Senator Bob Corker worried aloud that the government is propping up banks that deserve to die.
thats a good sign getplaning we have crossed swords before because of different politics but our commom sense prevails,if obama gets away from the hacks like perlosi and,chuck and the politics before country brigade then people like me will rise up and give him some support.
