"At the heart of the plan is an effort to make loans more affordable by providing a government subsidy to help mortgage companies modify certain troubled loans. The administration is expected to kick in $50 billion out of the bailout fund to help mortgage companies with the costs of such an effort. In addition, the administration is expected in the Wednesday announcement to detail a program that will allow homeowners who owe more than their homes are worth to refinance their mortgages, something that currently isn't possible."
"Devising a comprehensive solution has posed political and financial challenges. The aim is to help homeowners without rewarding risky behavior or spending hundreds of billions of dollars. It's hard for the government to compel mortgage companies to rewrite the terms of loans.
"Also, such plans tend to raise the ire of homeowners who have been diligently making regular mortgage payments. To make loans more affordable, the Obama administration is expected to support a mix of efforts, including lowering interest rates or lengthening the term of some loans, said people familiar with the plans.
"Because any reduction in monthly payments will hurt the bank or investor who owns the loan, the government is expected to help defray the costs with a subsidy. That could take the form of a direct payment. The government could also match, point by point, any interest-rate reduction made by the servicer.
"The administration may provide between $800 to $1,000 per loan, according to a financial-services representative familiar with the plans. The goal is to compensate banks or investors who own the loans if they reduce payments to a certain level, possibly as low as 31% of a borrower's pretax income.
"In addition, the administration could indemnify mortgage servicers from being sued by investors angered by any changes made to the loan agreements. This is important because many loans have been repackaged and sold to investors. To determine who qualifies for a lower monthly payment, the administration is expected to look at homeowners' debt-to-income ratio, these people said."
The Journal's Ruth Simon adds that the challenge facing this plan is how to make these modified loans attractive. "The Obama administration's housing plan, set to be rolled out Wednesday, will have to reckon with a little-understood fact underlying current efforts to slow foreclosures: More than half of mortgage modifications have left borrowers with the same or higher loan payments.
"While modifications are designed to keep owners in their houses, by the time they are worked out, borrowers often are well behind on their loans. Lenders often add these past-due amounts -- which can include principal, interest, taxes and insurance -- driving monthly payments higher. At the same time, lenders have been reluctant to reduce principal even for borrowers who owe far more than their homes are worth."
Why Phoenix? "For the past two decades, the Phoenix metropolitan area boomed, its population growing by more than 50%. But since late 2007, boom has turned to bust. Home prices have tumbled 40% in a year, figures from Arizona State University show, prompting investors to abandon their properties and leaving overextended homeowners to face foreclosure," reports USA Today's Richard Wolf.
"In a surprising turn of events, the two 2008 White House combatants were expected to have a close encounter Tuesday evening. McCain, who will seek re-election a fifth Senate term next year, had scheduled a fundraiser at the InterContinental Montelucia Resort and Spa in Paradise Valley.
"Not only did Obama decide to stay in the same resort, but the presidential motorcade and McCain's entourage both were scheduled to arrive at 5:30 p.m. The White House confirmed that McCain and Kyl were invited to Obama's Mesa event today, but neither is expected to attend," the Arizona Republic's Catherine Reagor and Dan Nowicki point out.
"The struggling Detroit automakers said in business plans submitted to the Treasury Department that they needed a total of $39 billion in taxpayer-funded loans by 2012 -- and perhaps billions more in following years -- to help them survive plunging auto sales amid the global recession. The requests now must be reviewed by the Obama administration, which faces the prospect that the auto industry could continue to seek bailout money for years to come."
"The companies said they plan to cut an additional 50,000 jobs worldwide, drop as many as six brands and shutter 14 plants in an attempt to survive one of the deepest recessions in decades," write the Washington Post's Peter Whoriskey and Kendra Marr.
"Once-popular lines such as GM's Hummer and Saturn will be spun off or, failing that, eliminated. Saab is up for sale. Chrysler will stop production of the PT Cruiser, Aspen and Durango by the end of the year. ... The automakers yesterday said they may need as much as $21.6 billion in additional loans -- $5 billion for Chrysler and the rest for GM. The requests announced yesterday come on top of $17.4 billion the companies received in recent months."
The brand that was once hailed as an important part of the future of General Motors now will be part of its past," adds the New York Times' Micheline Maynard.
"G.M. said Tuesday that it would phase out its Saturn brand by 2012. It does not plan to develop any more new vehicles for Saturn, which began 19 years ago as an effort to attract owners of small Japanese cars. G.M. also said it was considering its options for the Pontiac division. The Pontiac name, part of the car business since 1932, could remain on some models, but may no longer be a separate division.
"G.M. said Pontiac would be a "focused brand" with fewer models. The disclosures by G.M., contained in a viability plan submitted to the government, means that G.M. plans to cut its brands in half, to four: Chevrolet, Cadillac, Buick and GMC."
"It's going to be a doozy of a welcome for a very special guest who is pretty much guaranteed to be a no-show. Bus trips have been organized in Montreal, Kitchener and Toronto. Hotel rooms are booked, Facebook groups are buzzing and websites have sprung up to give visitors all the latest information. They're coming to wave signs on Parliament Hill — if security allows it — and to cheer at a church rally, where the poet Oni the Haitian Sensation will be performing.
"Mayor Larry O'Brien might be part of the action, though he hasn't confirmed yet, and a singer is flying in from Halifax to sing a duet with a trio of teenage sisters from Hamilton. Then — if security allows it — there will be a symbolic 'Yes We Span' march across the Laurier Avenue Bridge and back, just before everyone gets back on their buses and heads home. All of this for U.S. President Barack Obama, a man one organizer says he knows his chances of seeing are 'zilch.'"
"In his first foreign trip as president, Obama will meet Thursday with Canadian Prime Minister Stephen Harper in Ottawa, the Canadian capital. The ties between their countries are vital: No country takes part in as much daily trade with the U.S. or exports as much oil to the U.S. as Canada does," reports the Associated Press' Ben Feller.
"Obama plans to underscore that the U.S. is not pulling back from trade even as it enforces new 'Buy American' language and reconsiders the 1994 North American Free Trade Agreement. The new American president has stirred up some nervousness north of the border by pledging to renegotiate NAFTA, which links the U.S., Canada and Mexico, to get better labor and environmental standards. When he was scrapping for the Democratic presidential nomination a year ago, Obama raised the notion of withdrawing from NAFTA. ... Now, though, Obama is choosing softer language."
"When President Barack Obama lands Thursday in Canada for his first foreign visit as the nation's chief executive, his pledge to wean Americans off 'dirty' oil will collide with the host country's aggressive push to send even more crude to the U.S.," writes the Chicago Tribune's Michael Hawthorne.
"Obama is promising to tackle the growing threat of climate change and promotes green energy as a solution. At the same time, refineries across the Midwest are poised to dramatically increase their emissions of heat-trapping pollution, a largely hidden consequence of the oil industry's steady shift toward Canadian crude dug out of tar-soaked clay and sand under the swampy forests of Alberta.
"The thick oil—much of it destined for refineries in Illinois, Indiana, Wisconsin, Michigan, Minnesota and Ohio—comes from the nation's top trading partner. But it also poses a serious challenge to Obama's environment and energy goals. Those competing interests will be an important subplot during Obama's meetings in Ottawa with Canadian Prime Minister Stephen Harper, who sees his country as an emerging energy superpower."
ALSO TODAY: First Lady Michelle Obama hosts 6th and 7th graders in the East Room of the White House for a performance by the African American female a capella group, Sweet Honey in the Rock.
Vice President Joe Biden will meet with U.S. Ambassador to Iraq Ryan Crocker this afternoon.
LOOKING AHEAD: "The White House is finishing plans for what it is calling a 'fiscal responsibility summit,' a three-hour bipartisan wonk-fest," reports The New York Times' Jackie Calmes. "Invitations are going out this week to 90 people: 30 members of the House, 30 senators and 30 scholars and representatives of advocacy groups such as AARP, according to a person familiar with the plans." The "summit" is scheduled for next Monday, Feb. 23.
"'The amount of money in both these pots may not be enough to solve the problem,' Greenspan said in an interview before a speech yesterday to the Economic Club of New York."
NY Times' Peter Baker, "Obama Team Has Billions to Spend, but Few Ready to Do It": "President Obama blasted through all sorts of speed records pushing a $787 billion economic plan through Congress, arguing it was too urgent to wait.
"But even after signing it into law Tuesday, he faces another problem: virtually no one is in place at his cabinet departments to actually spend a lot of the money. 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. The slowdown seems to stem both from the administration's sharpening its vetting process after losing several nominees and from Senate committees' taking more time to consider names that have been sent to Capitol Hill. As a result, the very departments charged with executing one of the largest spending projects in American history are operating largely with career stand-ins without the authority of political appointees."
USA Today's Mimi Hall and David Jackson, "Stimulus slammed as Dems' agenda": "The economic stimulus package President Obama signed on Tuesday gives a huge boost to a host of social programs, research proposals and construction projects that Democrats and advocacy groups have been promoting for years. The $787 billion stimulus legislation contains new spending on health care, education, energy and the environment, including for programs to teach math and reading in poor school districts, build high-speed rail systems, study disease prevention, weatherize homes and more. ...
"Conservatives and Republican leaders in Congress say the plan won't do enough to stimulate the broken economy and will leave a staggering debt."
NY Times' Sheryl Gay Stolberg and Adam Nagourney, "Recovery Measure Becomes Law and Partisan Fight Endures": "The division between the two parties over the bill's political repercussions was almost as stark as that over its substance. Leaders of the Democratic Senate and House campaign committees said in interviews that they would try to ensure that Republicans paid a price in 2010 for having opposed the measure. Not a single Republican in the House voted for the bill, and only three Republicans backed it in the Senate. …
"Republican leaders moved just as quickly to portray the bill as a boondoggle. Republican aides said they would seize on every instance of potential abuse as a way of stirring public doubt about the measure. Mr. Steele said that he foresaw a 'slight bump' in the economy because of the enormous amount of money to be spent, but that he did not expect it to be lasting."
LA Times' Ralph Vartabedian, "Treasury Department sees modest cutback in bank lending": "The nation's major banks modestly reduced their overall lending in recent months, even while they were collecting nearly $200 billion in federal bailout funds, the Treasury Department said Tuesday in its first progress report on the banking rescue program. The survey of 20 major banks left unresolved the question of how well the government banking bailout program is working, though economists and finance experts were generally reassured that lending had held up relatively well in the face of a drastic economic downturn and a near meltdown in the banking industry."
Wall Street Journal's Michael R. Crittenden and Meena Thiruvengadam, "Treasury Finds No Rise in Bank Lending": "A Federal Reserve survey of banks released this month found about two-thirds of banks reported they tightened terms for business loans over the past three months. The department has come under pressure from Congress and the public to better account for the funds amid fears that banks are hoarding cash provided by taxpayers. 'In the face of severe economic deterioration during this period ... lending levels largely held steady and would have likely been lower absent capital provided to banks,' the Treasury said. That is a switch from the administration's previous posture on bank lending. Treasury and other administration officials have said that the expected decline in fourth-quarter lending was a sign that the program wasn't working as intended."
WAR ON TERROR
4274336Politico's David S. Cloud and Mike Allen, "Obama shifts focus to Afghanistan": "By ordering as many as 17,000 additional troops to Afghanistan on Tuesday, President Barack Obama has begun shifting the country's military effort away from Iraq, as he promised to do during the presidential campaign. But by redeploying troops so early in his presidency, he is committing himself even more firmly to quick withdrawals of American forces in Iraq — and that carries risk.
"If the largely positive security trends in Iraq turn negative, Obama and the military commanders on the ground will almost certainly have fewer military assets to respond. And more forces could be shifted away from Iraq in coming months once the administration completes a review of its strategy in Afghanistan, officials said. So far Obama appears willing to accept—and even minimize—the risk in Iraq, while emphasizing as he did in the campaign that it is Afghanistan where the more pressing threats to the U.S. exist."
USA Today's Susan Page and Tom Vanden Brook, "Obama's war: Deploying 17,000 raises stakes in Afghanistan": "His administration cast the move as an interim step to battle the resurgent Taliban, secure Afghanistan's border with Pakistan, increase security for summer elections and stem the decline in a war that the United States now risks losing. More forces may follow: Gen. David McKiernan, who commands U.S. and NATO troops there, has asked for a total of 30,000 additional troops. That would nearly double the U.S. force. ...
"For the new president, Afghanistan looms as a defining military conflict. ... Balancing the U.S. commitment between Iraq and Afghanistan almost certainly will cause strains. Gen. David Petraeus, chief of the U.S. Central Command, has expressed concern about pulling out troops too quickly as a still-fragile Iraq prepares for elections at year's end, but more U.S. troops won't be available for Afghanistan unless they're not sent to Iraq."
NY Times' Charlie Savage, "Obama's War on Terror May Resemble Bush in Some Areas": "Even as it pulls back from harsh interrogations and other sharply debated aspects of George W. Bush's "war on terrorism," the Obama administration is quietly signaling continued support for other major elements of its predecessor's approach to fighting Al Qaeda.
"In little-noticed confirmation testimony recently, Obama nominees endorsed continuing the C.I.A.'s program of transferring prisoners to other countries without legal rights, and indefinitely detaining terrorism suspects without trials even if they were arrested far from a war zone. The administration has also embraced the Bush legal team's arguments that a lawsuit by former C.I.A. detainees should be shut down based on the 'state secrets' doctrine.
"It has also left the door open to resuming military commission trials. And earlier this month, after a British court cited pressure by the United States in declining to release information about the alleged torture of a detainee in American custody, the Obama administration issued a statement thanking the British government 'for its continued commitment to protect sensitive national security information.'
"These and other signs suggest that the administration's changes may turn out to be less sweeping than many had hoped or feared — prompting growing worry among civil liberties groups and a sense of vindication among supporters of Bush-era policies."
Wall Street Journal's Yuka Hayashi and Jay Solomon, "Clinton Pursues Delicate Diplomacy, Meeting Japan's Aso and Opposition": "The U.S. appears to be hedging its bets with its major Asian ally as the government of Japanese Prime Minister Taro Aso grows weaker, hurt by his sinking popularity and inability to tackle the economic crisis. ...
"Mrs. Clinton and Japanese Foreign Minister Hirofumi Nakasone said in a joint news conference that the summit should send a signal that the world's two largest economies are developing a common approach to end the financial crisis. Mrs. Clinton met with Mr. Aso in Tokyo on the first stop of her Asia tour.
"But in a sign that the U.S. is preparing for a possible political change in Tokyo, Mrs. Clinton met later in the day with the head of Japan's main opposition party, the Democratic Party of Japan. Its leader, Ichiro Ozawa, advocates a "more equal partnership" with the U.S. in its bilateral security alliance and has clashed with the ruling party on legislation authorizing Japan's military cooperation with Washington.
"Aides to Mrs. Clinton said she wanted to meet Mr. Ozawa to hear from a range of people in Japan. A senior U.S. official denied that Washington is anticipating Mr. Aso's fall and said Mrs. Clinton and the opposition politician discussed 'a wide array of issues,' including security."
4804423NY Times' Mark Landler and Martin Fackler, "Clinton Offers Words of Reassurance While in Japan": "In words and gestures, Secretary of State Hillary Rodham Clinton offered reassurance to Japan on Tuesday, calling its alliance with the United States a 'cornerstone' of American foreign policy and meeting with families of Japanese citizens abducted by North Korea.
"Mrs. Clinton then departed on Wednesday for Jakarta, Indonesia, the second stop on a four-country tour that includes stops in South Korea and China. As with the stopover in Japan, the visit to Indonesia is steeped in symbolism: it is the first Muslim country she will visit and the start of what she said would be a 'concerted effort' by the Obama administration to bring a new message to the Islamic world.
"Mrs. Clinton may also lay the groundwork for a visit by President Obama, who lived in Jakarta as a boy. She has told colleagues that she is fascinated by Indonesia's ability to achieve political stability after its economic crisis in the late 1990s, and that she wonders if it holds any lessons for Pakistan."
Washington Post's Glenn Kessler, "Clinton Says U.S. Seeks Unity With Muslim World": "Secretary of State Hillary Rodham Clinton said Tuesday that the Obama administration will make 'a concerted effort' to restore the image of the United States in the Islamic world and will seek to 'enlist the help of Muslims around the world against the extremists.'
SEN. ROLAND BURRIS
4804552Chicago Tribune editorial, "Roland Burris, resign": "The benefit of the doubt had already been stretched thin and taut by the time Roland Burris offered his third version of the events leading to his appointment to the U.S. Senate. It finally snapped like a rubber band, popping him on that long Pinocchio nose of his, when he came out with version four. ... The story gets worse with every telling. Enough. Roland Burris must resign."
NY Times' Monica Davey and Dirk Johnson, "2 Investigations Into Burris Are Begun": "The United States Senate Ethics Committee and a local Illinois prosecutor began investigations on Tuesday into the recently appointed junior senator for Illinois, Roland W. Burris, over Mr. Burris's shifting, inconsistent descriptions of how he came to be named to the seat vacated by the election of President Obama. Mr. Burris, a onetime state attorney general chosen to fill Mr. Obama's Senate seat by Gov. Rod R. Blagojevich in the final weeks of Mr. Blagojevich's beleaguered administration, said he had done nothing wrong and welcomed all investigations.
Chicagobreakingnews.com, "Burris: I'm open to Senate ethics investigation": "U.S. Sen. Roland Burris said today he is open to a Senate ethics investigation into how he got the Senate seat from ex-Gov. Rod Blagojevich and that he has reached out to a Sangamon County prosecutor who is reviewing Burris' sworn testimony before Illinois lawmakers. ... 'I have made an effort to be as transparent as I can,' Burris said. 'I have nothing to hide.' Burris said, 'I welcome the opportunity to go before any and all investigative bodies...to answer any questions they have.'"
MINNESOTA SENATE RECOUNT
Associated Press' Henry C. Jackson, "Stimulus highlights stakes of Minnesota recount"
Washington Post's R. Jeffrey Smith and Joby Warrick, "Obama, Gates at Odds Over New Whistleblower Protections"
NY Times' Jim Rutenberg and Jo Becker, "Aides Say No Pardon for Libby Irked Cheney"
"Nearly every move that Palin makes or does not make, acknowledges Joe Balash, one of her closest aides, is analyzed through a new political prism, scrutinized for its effect on a possible 2012 presidential candidacy. 'There's nothing we can do to stop it,' he said. 'People wonder why she's doing something or not doing something.' The result of all this scrutiny and second-guessing, says one Republican ally, is that 'the governor has been feeling beaten up.'"
Anchorage Daily News' Lisa Demer, "Palin to pay tax on past per diem": "Gov. Sarah Palin must pay income taxes on thousands of dollars in expense money she received while living at her Wasilla home, under a new determination by state officials. ... The payments became a touchy issue for Palin last fall when she was running for vice president and campaigned as a budget watchdog."