Tales from the Trail

Washington Extra – Proposals to nowhere

A line kept cropping up in our stories from Washington today, something along the lines of “unlikely to be passed in Congress.”

President Obama went out to Falls Church, Virginia to tout his $5 billion to $10 billion plan to help homeowners refinance. The proposal, sketched out in last week’s State of the Union address, could provide relief to many locked into high rates by their homes’ sagging value. But it doesn’t look like it will overcome Republican opposition.

Democrats also introduced today the “Paying a Fair Share Act of 2012,” longhand for the “Buffett Rule” that Obama also raised in his address last week. The idea is that millionaires would pay a minimum 30 percent effective tax rate. It has almost no chance of passage in a Republican-controlled House that has sworn off tax increases.

Sure, this kind of political theater is part of the Washington spectacle. But we thought it was best to tell readers to sit back and enjoy the show – rather than start making plans for the future.

Here are our top stories from Washington…

Obama presses Congress to step up aid for homeowners
President Barack Obama pressed lawmakers to back a $5 billion to $10 billion plan to help U.S. homeowners refinance, part of an election-year package that is unlikely to overcome Republican opposition in Congress. Obama moved to counter Republican criticisms that the proposal would use taxpayer money to bail out irresponsible borrowers by stressing that only homeowners current on their payments could benefit. The president had sketched out the plan in his State of the Union address last week.

Washington Extra – Coy in California

California prides itself on setting trends for the nation. This week, it may be the state that bucks the trend if it decides to abstain from a multi-state and federal settlement with the big banks on mortgage abuses.

States must say by the end of this week whether they are in or out of the deal and California is very much in doubt. Attorney General Kamala Harris, a rising star in the Democratic Party, is concerned the banks may get off too easily. Just last week, her people were calling the settlement “inadequate.”

But can she afford to walk away from more than $10 billion that homeowners could collect in her state, where the housing crisis has ravaged communities from Stockton to San Diego? And would she be able to get more for them if she went it alone?

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.

foreclosures3The 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.”

from Reuters Investigates:

In case you missed them

Just because it was summer, doesn't mean we weren't busy here at Reuters. Here are a few of our recent special reports that you might have missed.

IRAN-OBAMA/ECOMOMYTracking Iran's nuclear money trail to Turkey. U.N. correspondent Lou Charbonneau -- who used to cover the IAEA for Reuters --  followed the money to Turkey where an Iranian bank under U.S. and EU sanctions is operating freely. Nice to see the New York Times follow up on this today, and the Washington Post also quizzed Turkey's president about it.

 

 

USA-ELECTION/JOBSBlue-collar, unemployed and seeing red -- Chicago correspondent James Kelleher went on the road for this story about the long-term unemployed and what that means for Obama and the Democrats at November's midterm elections.

Muddy manse

Selling your house? Worried about having to lower the price to get it to move?

How about a $1.275 million price reduction? That’s how much former Fannie Mae CEO Daniel H. Mudd had to cut the asking price on his 11,500 square foot, six bedroom, six full bath (plus three half baths) mansion to find a buyer.  Originally listed for $8.9 million on September 11, the transaction closed on December 11 for $7.625 million.

 

Don’t worry too much for Mr. Mudd, though. He paid $5.15 million for the place in June 2000, leaving him with a 48 percent return on his investment, excluding any renovation costs. And even though he was booted from Fannie Mae when the government took over the housing giant in September 2008 and reportedly wasn’t paid his multi-million dollar severance package, he’s landed on his feet. New York’s Fortress Investment Group named him CEO in August.

 

Wondering what you could have bought from the son of the former NBC News anchor Roger Mudd? Here’s the listing agent’s description:

Brad Pitt tries out role as lobbyist

brad1Hollywood star Brad Pitt made the rounds in Washington on Thursday keeping a low profile while calling on some some high-profile people to promote sustainable housing.******Pitt dropped by the White House for a private meeting with President Barack Obama but the White House said there was “no read-out” on the visit.******Pitt also went to Capitol Hill to meet with House Speaker Nancy Pelosi and Majority Whip James Clyburn. He joined them for that time-honored Washington tradition: a media availability behind a bank of microphones.******Pitt thanked Pelosi for taking time to talk to him about the post-hurricane rebuilding effort going on in New Orleans, where his “Make it Right” foundation is constructing sustainable houses for low-income residents in the city’s Lower 9th Ward.***    ***Pelosi hailed Pitt as a role model. Clyburn thanked Brad for his help …  and for giving him bragging rights.******”I did not realize when the speaker asked me to chair the Katrina- Rita Task Force that it would lead to my getting in a position to make my grandchildren so envious of me because this effort brought the two of us, Brad Pitt and myself, together,” the South Carolina Democrat said.  ***   ***For the record, Pitt was flying solo on the Hill.  Angelina Jolie was making her own low-key appearance in town shooting a scene for a movie in a blond wig.

First Draft: bad, add, mad

Mortgages gone bad, auto industry seeking an add, and a chimpanzee gone mad starting off the day.

President Barack Obama out in Arizona to outline a housing bailout plan to offer help on distressed mortgages at 12:15 p.m. Washington time. The plan commits up to $275 billion to support housing, including through government subsidies to mortgage lenders to encourage lower payments for borrowers.

FINANCIAL/TIMES-FORECLOSURES

More negative economic data. New U.S. housing starts and permits dropped to record lows in January. Housing starts fell 16.8 percent to an annual rate of 466,000 units and new building permits fell 4.8 percent to 521,000 units.