Surging U.S. Unemployment Rate Puts Pressure on Obama

By Bob Willis | Bloomberg.com

The jump in the U.S. unemployment rate to the highest level in a quarter century last month suggests the recession is deeper than the Obama administration forecasts and additional measures may be needed to restart growth.

The jobless rate rose to 8.1 percent in February as employers reduced payrolls by 651,000, the Labor Department said yesterday in Washington. Losses have now exceeded 600,000 for three straight months, the first time that’s happened since collection of the data began in 1939.

Unemployment has already reached the average rate the White House projected for the whole year. The administration needs to keep its focus on repairing the banking system and implementing the stimulus rather than get diverted by other goals such as healthcare changes, said John Ryding, chief economist at RDQ Economics LLC in New York.

“They should be focused on stabilization” of financial firms “and stimulus — and that should not only be ‘Job one,’ that should be the only job right now,” Ryding said in an interview with Bloomberg Television. “The question is, is it recession or is it something worse than recession?”

U.S. stocks posted the biggest weekly decline in three months after American International Group Inc. reported a $61.7 billion loss and billionaire investor Warren Buffett said the economy is in “shambles.” …

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Opinion from News Donkey: Obama recently held a White House summit to facilitate progress on the important issue of health care. An underlying pillar of health care is the economy, which is in a state of major distress that is only going to get worse unless Geithner and the US Treasury Department take swift action. However, Geithner is virtually working alone right now. For a nation with the extensive resources of the United States, we really ought to be able to do better than this. Obama may want to hold a summit to facilitate vetting and confirmation for all the Treasury Department positions. It is alarming that of 15 key positions only one has been filled, despite the fact that it has been over four months since the presidential election. One might have thought priority attention would have been given by Obama’s transition team to staffing for the Treasury. Past administrations may not have filled positions for the Treasury any faster, but then they did not face such huge economic challenges either. Health care is an important issue, but the economy is truly an emergency and needs to be more than just a high priority issue along side other issues. Fielding an incomplete team to tackle our huge economic problems is not putting forth our best foot. Washington needs to spend less time worrying about distractions like Rush Limbaugh and instead work non-stop on solving our economic problems.

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U.S. Mortgage-Modification Rules to Require Proof of `Financial Hardship’

By Robert Schmidt and Dawn Kopecki | Bloomberg.com

March 4 (Bloomberg) — The Obama administration set loan modification guidelines for its $75 billion homeowner rescue plan, agreeing to pay lenders for altering troubled mortgages while reducing borrowers’ interest rates as low as 2 percent.

The initiative, first announced on Feb. 18, would require applicants for loan modifications to fully document their income with pay stubs and tax returns, and sign an affidavit attesting to “financial hardship,” according to documents released by the U.S. Treasury in Washington today. The second, larger part of the plan relies on government-run Fannie Mae and Freddie Mac to refinance loans.

President Barack Obama’s initial proposal, the biggest federal foray into real estate since the Great Depression, ignited criticism from Republican lawmakers that the government would end up subsidizing homeowners who are financially capable of surviving the economic slump on their own.

“This plan will help make home ownership more affordable for 9 million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans,” Treasury Secretary Timothy Geithner said today in a statement.

Obama is seeking to curb a jump in foreclosures that, along with a drop in consumer credit, is lowering property values, dragging down the economy and keeping prospective homebuyers away. The housing market lost $3.3 trillion in value last year, and almost one in six owners with mortgages owed more than their homes were worth, according to a report last month by Zillow.com …

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More Fact-Checking of Obama’s Speech

The president gets facts wrong about oil imports, mortgage aid and the transcontinental railroad, and more.

FactCheck.org

President Obama’s first speech to a joint session of Congress was stuffed with signals about the new direction his budget will take and meant-to-be reassuring words about the economy. But it was also peppered with exaggerations and factual misstatements.

He said “we import more oil today than ever before.” That’s untrue. Imports peaked in 2005 and are substantially lower today.

He claimed his mortgage aid plan would help “responsible” buyers but not those who borrowed beyond their means. But even prominent defenders of the program including Fed Chairman Bernanke and FDIC chief Bair concede foolish borrowers will be aided, too.

He said the high cost of health care “causes a bankruptcy in America every 30 seconds.” That’s at least double the true figure.

He flubbed two facts about American history. The U.S. did not invent the automobile, and the transcontinental railroad was not completed until years after the Civil War, not during it.

He claimed that his stimulus plan “prevented the layoffs” of 57 police officers in Minneapolis. In fact, it’s far more complicated than that, and other factors are also helping to save police jobs.

The president also repeated some strained claims we’ve critiqued before …

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Related News: FACT CHECK: Obama’s Words on Home Aid Ring Hollow

Dem Spat Delays Mortgage Relief Bill in House

By JULIE HIRSCHFELD DAVIS | Associated Press

WASHINGTON – A dispute among House Democrats stalled legislation Thursday to let bankruptcy judges reduce the principal and interest rate on mortgages for debt-strapped homeowners.

The measure, backed by President Barack Obama, is the most controversial part of a broader housing package that had been expected to pass the House this week.

It hit a snag after a group of moderates expressed concerns in a closed-door meeting of House Democrats about how the bill would affect homeowners who are still struggling to make their mortgage payments.

The banking industry has lobbied hard against the measure, mounting a successful multimillion-dollar effort last year to kill it …

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FACT CHECK: Obama’s Words on Home Aid Ring Hollow

By CALVIN WOODWARD and JIM KUHNHENN | Associated Press

WASHINGTON – President Barack Obama knows Americans are unhappy that their taxes will be used to rescue people who bought mansions beyond their means.

But his assurance Tuesday night that only the deserving will get help rang hollow.

Even officials in his administration, many supporters of the plan in Congress and the Federal Reserve chairman expect some of that money will go to people who used lousy judgment.

The president skipped over several complex economic circumstances in his speech to Congress — and may have started an international debate among trivia lovers and auto buffs over what country invented the car.

A look at some of his assertions:

OBAMA: “We have launched a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and refinance their mortgages. It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values.”

THE FACTS: If the administration has come up with a way to ensure money only goes to those who got in honest trouble, it hasn’t said so …

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Rasmussen Polls Shed Light on Reactions to U.S. Economic Intiatives

Rasmussen Reports

54% Say ‘No’ To All Bailouts

55% Say Government Mortgage Help Rewards Bad Behavior

Confidence in Stimulus Plan Drops Over Past Week

Obama Unveils $75 Billion Mortgage Relief Plan

By MARK S. SMITH and ALAN ZIBEL | Associated Press

MESA, Ariz. – Seeking to tackle “a crisis unlike any we’ve ever known,” President Barack Obama unveiled an ambitious $75 billion plan Wednesday to keep as many as 9 million Americans from losing their homes to foreclosure.

Announcing the plan in Arizona — a state especially hard hit by the housing crunch — Obama said that turning around the battered economy requires stemming the continuing tide of foreclosures. The housing crisis that began last year set many other factors in motion and helped lead to the current, widening recession.

“In the end, all of us are paying a price for this home mortgage crisis,” Obama said at a high school outside Phoenix. “And all of us will pay an even steeper price if we allow this crisis to deepen.”

But while talking in broad strokes about the importance of the issue to the economy as a whole, the president took care not to miss the pain that the housing problems are causing in individual families

“The American Dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods,” he said. “While this crisis is vast, it begins just one house and one family at a time.”

More expensive than expected, Obama’s plan aims to keep between 7 million and 9 million people from foreclosure. Of the nearly 52 million U.S. homeowners with a mortgage, about 13.8 million, or nearly 27 percent, owe more on their mortgage than their house is now worth, according to Moody’s Economy.com.

Headlining Obama’s plan is a $75 billion Homeowner Stability Initiative, which would provide a set of incentives to mortgage lenders in an effort to convince them to help up to 4 million borrowers on the verge of foreclosure. The goal: cut monthly mortgage payments to sustainable levels, defined as no more than 31 percent of a homeowners income. Funding would come from the $700 billion financial industry bailout passed by Congress last fall …

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Obama Signs Stimulus Bill, Readies Homeowner Plan

By LIZ SIDOTI and TOM RAUM | Associated Press

DENVER – President Barack Obama put his own indelible imprint on the nation’s distressed economy Tuesday, signing the huge recovery package into law, readying a $50 billion proposal to help homeowners fend off foreclosure and awaiting emergency restructuring plans from flailing automakers. Obama said the sprawling legislation, which congressional Democrats pushed to passage last week over near-unanimous opposition from Republicans, would “set our economy on a firmer foundation.”

Obama’s first major piece of legislation, it’s a $787 billion mix of tax cuts and one of the biggest public spending programs since World War II.

“I don’t want to pretend that today marks the end of our economic problems. Nor does it constitute all of what we have to do to turn our economy around. But today does mark the beginning of the end, the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs,” Obama said …

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How Banks Are Worsening the Foreclosure Crisis

How the banking industry is undermining efforts to keep people in their houses

By Brian Grow, Keith Epstein and Robert Berner | BusinessWeekOnline

The bad mortgages that got the current financial crisis started have produced a terrifying wave of home foreclosures. Unless the foreclosure surge eases, even the most extravagant federal stimulus spending won’t spur an economic recovery.

The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan—whatever its details—can’t possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments.

So far the industry hasn’t shown that kind of foresight. One reason foreclosures are so rampant is that banks and their advocates in Washington have delayed, diluted, and obstructed attempts to address the problem. Industry lobbyists are still at it today, working overtime to whittle down legislation backed by President Obama that would give bankruptcy courts the authority to shrink mortgage debt. Lobbyists say they will fight to restrict the types of loans the bankruptcy proposal covers and new powers granted to judges …

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