Fed Under Pressure to Reveal AIG Bailout Recipients
(AP Photo/Gerald Herbert)
File photo: Republican Sen. Jim Bunning wants to know who benefited from the $173 billion AIG bailout
A report that U.S. and European banks benefited by about $50 billion through the bailout of ailing insurer American International Group may increase pressure on the Federal Reserve to be less secretive.
The Wall Street Journal reported in its weekend editions that the indirect bailout recipients were Goldman Sachs, Germany's Deutsche Bank AG, Merrill Lynch (now part of Bank of America), French bank Soci?t? G?n?rale SA, Royal Bank of Scotland Group PLC and HSBC Holdings PLC.
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Is Obama Breaking His Vow Of Transparency?
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The White House claims that President Obama's administration will be "the most open and transparent in history," and announced on Friday it will convene a conference on March 12 to ensure "transparency" in the way money from last month's massive spending bill is distributed.
This would be a change from the secretive way that bill rocketed into law. As a candidate for office, Mr. Obama promised he would "not sign any non-emergency bill without giving the American public an opportunity to review and comment on the White House website for five days."
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The White House claims that President Obama's administration will be "the most open and transparent in history," and announced on Friday it will convene a conference on March 12 to ensure "transparency" in the way money from last month's massive spending bill is distributed.
This would be a change from the secretive way that bill rocketed into law. As a candidate for office, Mr. Obama promised he would "not sign any non-emergency bill without giving the American public an opportunity to review and comment on the White House website for five days."
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Are Federal Regulators To Blame For The Crash?
Here's a question that seems pretty timely: How much of the unsustainable sizes of the stock market and housing bubbles is due to regulatory incompetence or mistakes?
There may never be a definitive answer, especially because there are so many explanations for why the economy became so bubblicious, including the Federal Reserve's excessively low interest rates, tax law changes and garden-variety fraud.
But this week's news about Darrel Dochow may provide a partial answer. Dochow was the west coast regional director at the Treasury Department's Office of Thrift Supervision, which is tasked with the job of regulating savings banks and savings and loans. OTS's official mission is "to supervise" such companies "to maintain their safety and soundness."
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There may never be a definitive answer, especially because there are so many explanations for why the economy became so bubblicious, including the Federal Reserve's excessively low interest rates, tax law changes and garden-variety fraud.
(ots.treas.gov)
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An End To Buy-and-Hold Stock Investing?
(AP Photo/Richard Drew)
Financial planners and writers love to assure skittish investors that, no matter how bad the stock market looks right now, share prices always go up by 10 percent or so in the long run.
A Yahoo Finance columnist assures us that since the 1920s, "stocks returned an average of 10.5 percent a year on investment." A New York Times article in 2005 says "money invested in the Standard & Poor's 500 has delivered a return of 10 percent a year on average," or 12 percent with dividends. Bloomberg News estimates the S&P 500 has a "long-term average of 9 percent to 10 percent."
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Will Biden's "Green Jobs" Really Pay Over $100,000?
(AP PHOTO)
One comment that the vice president made is worth highlighting. Workers who made $20 an hour before a green jobs training program can make $50 an hour after, Biden said.
If true, that would be pretty remarkable. A job that pays $50 an hour pays roughly $104,000 a year. That's a handsome salary, especially as layoffs are rising and the economy is shrinking.
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Biden Wants To Help The "Middle Class" -- Is That You?
No Washington politician can do wrong talking up the merits of baseball, apple pie, or America's patriotic, hard-working and ambiguously-defined middle class.
Former President George W. Bush released what he called a "Blueprint for the Middle Class" in September 2000, and a Google search says the phrase "middle class" appears 432 times on www.barackobama.com. On Friday, Vice President Joe Biden became the latest politician to embrace the term, convening what he called a "Middle Class Task Force" meeting in Philadelphia and launching a Web site called AStrongMiddleClass.gov (it redirects to a White House page).
Biden's let's-help-out-the-middle-class suggestion is to create more green jobs. A 33-page report his task force released on Friday says "green jobs have the potential to be quality, family-sustaining jobs that also help to improve our environment" that pay more, are more likely to be unionized, and can't be easily off-shored.
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Former President George W. Bush released what he called a "Blueprint for the Middle Class" in September 2000, and a Google search says the phrase "middle class" appears 432 times on www.barackobama.com. On Friday, Vice President Joe Biden became the latest politician to embrace the term, convening what he called a "Middle Class Task Force" meeting in Philadelphia and launching a Web site called AStrongMiddleClass.gov (it redirects to a White House page).
(AP PHOTO)
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Ex-Bush Economist: Blame The Federal Reserve For The Crash
(CBS/iStockphoto)
John Taylor, a professor of economics at Stanford University and a senior fellow at Stanford's Hoover Institution, answers that question in a new book published this week called Getting Off Track: How government actions and interventions caused, prolonged, and worsened the financial crisis.
As you might guess from the title, Taylor concludes that blame lies primarily with the Federal Reserve's unreasonably low interest rates for much of the last decade. He also points an accusatory finger at "the failure to rein in Fannie and Freddie" (meaning Rep. Barney Frank and other Democratic congressional enablers) and "the lack of clarity in the operation" of last fall's financial bailout plan (meaning the Bush administration, plus congressional leaders who drafted the legislation).
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Obama's Budget Request Takes Aim At Republicans
(AP)
It should be no surprise that new presidential administrations like to take jabs at their predecessors from a different political party. Or that federal budget requests are one way to do it.
When President Bush submitted his first budget in 2001, he called it "A Blueprint for New Beginnings," a mild swipe at Bill Clinton, with a subtitle "of "A responsible budget for America's priorities."
Mr. Bush's introductory remarks talked up "compassionate" conservativism, saying there was a third approach beyond "divided" politics in Washington.
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Is Obama Serious About Fiscal Responsibility?
In mid-October, Democratic politicians in Washington were proposing to spend $300 billion through what they called a stimulus bill. The final version that President Obama signed last week eventually ballooned to $787 billion.
This is the reality that the president faces today as he and Vice President Joe Biden convene a meeting at the White House called the "Fiscal Responsibility Summit" with over 100 invited participants, including some Republicans. As CBSNews.com reported earlier, the meeting comes a few days before the Obama administration will send its first budget request to the U.S. Congress.
The challenge for Mr. Obama will be introducing fiscal prudence into a Washington culture that has shown great affection for encouraging the government to live far beyond its means.
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(CBS)
The challenge for Mr. Obama will be introducing fiscal prudence into a Washington culture that has shown great affection for encouraging the government to live far beyond its means.
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Questioning Obama's Mortgage Bailout Plan
(AP Photo/Gerald Herbert)
mortgage bailout announcement on Wednesday directs $75 billion in government funds to bail out certain borrowers who are behind on mortgage payments or "at risk" of falling behind.
Although the president said that "it will not rescue the unscrupulous or irresponsible," there's no requirement that that U.S. Treasury deny bailouts to Americans who took outsize risks in hopes that their homes would continue to appreciate.
Which is why Obama's announcement has drawn a howl of protest from renters and those people -- yes, they exist -- who bought cheaper, modest homes they could comfortably afford.
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FAQ: How Will Obama's Housing Plan Work?
(AP Photo/Gerald Herbert)
President Obama announced a $75 billion plan on Wednesday that he said would help as many as 9 million Americans avoid foreclosure.
As EconWatch previously noted, not all of the details are public, and we're expecting to hear more on March 4. For now, though, the below list of Frequently Asked Questions reflects what we've been able to find out so far.
Q: Which mortgage borrowers qualify?
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In Housing Bailout, Look At The Fine Print
(CBS)
The goal of this plan -- call it the Housing Bailout of 2009 -- appears to be to use money already approved by Congress as part of last October's Troubled Assets Relief Program to slow the pace of housing foreclosures.
"We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their homes," Mr. Obama said on Tuesday.
The fine print is what really matters. It's one thing to say that borrowers whose house prices are underwater or lost their jobs through no fault of their own should receive taxpayer aid -- but another thing to write the regulations in a way that helps the innocent while rejecting those who fibbed about their salary or bought more home than they could actually afford. (For the apotheosis of such speculators, see the case of Sacramento's Casey Serin.)
Another point to keep in mind is that not all metro areas have experienced a housing bubble. The S&P/Case-Shiller Home Price Indices show that for the decade ending August 2008, house prices in the New York and Washington, D.C. metro areas leapt by around 2.2 times, while non-bubbly areas like Cleveland saw an increase of a mere 1.17 times.
Any housing bailout of coastal properties raises the obvious question: Should taxpayers in the non-bubbly heartland be required to bail out those living in coastal states? And is it fair for renters or those who lived within their means to bail out those who didn't?
Mr. Obama may not divulge enough detail on Wednesday to let these questions be answered; the details may not be released until later. When that happens, be sure to read the fine print.
Welcome To EconWatch
4793374This new blog on CBSNews.com is devoted to chronicling a topic that's shaping up to be the most important story of 2009. Much of the news is grim: Stocks prices have plummeted by nearly half, and economies around the world are shrinking. On the other hand, January's unemployment rate of 7.6 is not nearly as high as 10.8 percent in 1982 or the truly massive job losses during the Great Depression.
EconWatch will feature original writing and commentary from our staff in New York, Washington, San Francisco and other bureaus. We will also highlight our award-winning coverage from other components of CBS News, including 60 Minutes, CBS Evening News and Face the Nation.
And because we know the Internet is a large place and other Web sites have interesting things to say, we'll point you toward other news organizations and some of the more thoughtful bloggers.
We hope you'll bookmark cbsnews.com/econwatch and the accompanying RSS feed. Also, we know you, our readers, will have information, thoughts, and perhaps stories you'd like to share; you can reach me by e-mail.
On a personal note, I've been writing the Other People's Money column for CBS News since October 2008 (here's the RSS feed), with a focus on the bailout, federal spending and the stimulus legislation that President Obama signed yesterday. I'll continue to write the column and contribute to EconWatch too.
EconWatch will feature original writing and commentary from our staff in New York, Washington, San Francisco and other bureaus. We will also highlight our award-winning coverage from other components of CBS News, including 60 Minutes, CBS Evening News and Face the Nation.
And because we know the Internet is a large place and other Web sites have interesting things to say, we'll point you toward other news organizations and some of the more thoughtful bloggers.
We hope you'll bookmark cbsnews.com/econwatch and the accompanying RSS feed. Also, we know you, our readers, will have information, thoughts, and perhaps stories you'd like to share; you can reach me by e-mail.
On a personal note, I've been writing the Other People's Money column for CBS News since October 2008 (here's the RSS feed), with a focus on the bailout, federal spending and the stimulus legislation that President Obama signed yesterday. I'll continue to write the column and contribute to EconWatch too.
