All Blog Posts from Econwatch
Intravenous Intervention
(AP)
"The conversion feature will enable institutions to maintain or enhance the quality of their capital," according to a joint statement from the U.S. Department of the Treasury, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Federal Reserve Board.
The government had demanded preferred shares as a condition of its $300 billion in TARP investments in 350 US banks. The idea was that government held preferred shares would put the taxpayer at the head of the line for repayment once the banks got their acts together. Although the injection of government capital in the banks kept the patient from dropping dead, it has yet to do anything to cure the underlying infection -- bad mortgage loans. Look no further than Citigroup and Bank of America's stock price since New Year's Day (both down more than 70%).
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Quants And Accounting Majors: Uncle Sam Needs You
4793929With an overwhelming focus on the resolving economic morass in his first 30 days in office, President Obama has muted his "hope" and "change" mantra and ratcheted up the "transparency" and "accountability" theme. With about $500 billion dollars to be doled out as quickly as possible, $350 million has been set aside to fund accountability for the American people (including $253 million to boost the inspector general corps).
According to the New York Times, the federal government might have a problem in hiring people who can provide the oversight: "Finding qualified auditors and investigators to supervise such a vast increase in government spending might be a challenge in itself, and some experts on government accountability programs warned that spending more on oversight did not always guarantee better results."
Indeed, the infrastructure needed to rebuild the U.S. financial infrastructure is shaky and understaffed to handle the rapid distribution and accounting for hundred of billions of dollars.
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According to the New York Times, the federal government might have a problem in hiring people who can provide the oversight: "Finding qualified auditors and investigators to supervise such a vast increase in government spending might be a challenge in itself, and some experts on government accountability programs warned that spending more on oversight did not always guarantee better results."
Indeed, the infrastructure needed to rebuild the U.S. financial infrastructure is shaky and understaffed to handle the rapid distribution and accounting for hundred of billions of dollars.
Continue »
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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Man Of Steel
If you want to get a good sense of how bad the foreclosure crisis has become, take a drive down South 11th Street in Newark, N.J. That's where we caught up with Scott Pyper and his crew.
Pyper is co-owner of Empty Building Security. His business shutters foreclosed homes with 14-gauge steel barriers. He may have the only growth industry in housing these days.
"In the last year and a half that we've been in business we've been very busy," Pyper said.
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Pyper is co-owner of Empty Building Security. His business shutters foreclosed homes with 14-gauge steel barriers. He may have the only growth industry in housing these days.
"In the last year and a half that we've been in business we've been very busy," Pyper said.
Continue »
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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Stuffing An Elephant Down A Snake's Throat
(White House)
Now that President Obama has rammed through his $787 billion stimulus package -- or American Recovery and Reinvestment Act (ARRA) -- the money needs to doled out, and rather quickly to have the desired effect of resuscitating the U.S. economy.
However, spending the money may not be so easy. According to a New York Times story, the infrastructure to dispense funding is not in great condition:
"The once efficient Obama transition has ground to a near standstill after tax problems bedeviled several of his nominees, leaving the top echelon of his government largely unassembled. Three cabinet jobs remain unfilled, only 2 of the 15 cabinet departments have deputy secretaries confirmed, and the vast majority of lower-level political jobs remain vacant.
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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.
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