Key Democrats Oppose Obama’s Tax Deduction Plan

By STEPHEN OHLEMACHER | Associated Press

WASHINGTON – President Barack Obama’s proposal to limit itemized tax deductions for high earners is running into opposition from key Democrats in Congress who worry that charities and the housing market would be hurt. Senate Finance Committee Chairman Max Baucus questioned Wednesday whether the proposal was viable, a day after his House counterpart also expressed reservations.

Treasury Secretary Timothy Geithner said tax increases on families making more than $250,000 a year are necessary to make a down payment on health care reform and to limit future budget deficits. But, he said, he was willing to work with lawmakers on proposals they objected to.

“We recognize there are other ways to do this,” Geithner told the Finance Committee.

Baucus, a Montana Democrat, said he thought the administration would be flexible on the proposal. “They want health care reform as much as I do,” he told reporters …

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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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Obama’s Plan to Hike Taxes Meets Fierce Opposition

By STEPHEN OHLEMACHER | Associated Press

WASHINGTON – President Barack Obama’s call to raise taxes on high earners and greenhouse gas polluters met fierce opposition Tuesday from congressional Republicans and also a few Democrats. “I would never want to adversely affect anything that is charitable or good,” Rep. Charles Rangel, D-N.Y., chairman of the tax-writing House Ways and Means Committee, said of Obama’s call to limit high-income taxpayers’ itemized deductions for charitable donations and mortgage interest.

Republicans said the president’s plan to charge fees to industries that spew greenhouse gases amounts to a stealthy tax increase for all Americans that will far exceed the new $400 annual tax cut for workers that he wants to extend beyond 2010.

“The president’s budget increases taxes on every American, and does so during a recession,” said Rep. Dave Camp of Michigan, the top Republican on the Ways and Means Committee …

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Treasury Ordered to Turn over Bailout Records

By NEDRA PICKLER | Associated Press

WASHINGTON – A federal judge has ordered the Treasury Department to give the Fox Business Network records about how the agency spent billions in bailout money.

The network filed requests under The Freedom of Information Act for records related to the funds spent on American International Group, the Bank of New York Mellon and Citigroup. The network specifically asked the department to identify the troubled assets purchased, any collateral extended and any restrictions placed on the financial institutions for their participation in this program.

U.S. District Judge Richard Holwell ruled Friday that the Treasury must comply with the request by March 23 …

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U.S. Forced to Offer Discounts to Lure Buyers of Failed Banks

By David Mildenberg and Ari Levy | Bloomberg.com

Feb. 19 (Bloomberg) — U.S. regulators are being forced to sell the assets of failed banks at a discount to lure buyers spooked by the likelihood of increased loan losses amid a deepening recession.

The assets of four banks have been sold to healthier rivals at a combined discount of $107 million this year, the Federal Deposit Insurance Corp. said. The FDIC had to offer a discount just once in 2008, when it engineered 25 bank takeovers.

Buyers for banks are in short supply after last year, when regulators closed the most lenders since 50 were shuttered in 1993. RBC Capital Markets analyst Gerard Cassidy predicts as many as 1,000 more will collapse within five years. The result may be a buyer’s market in which the FDIC will lay out even bigger sums to get rid of seized banks …

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Well Known Car Brands on the Chopping Block

As part of their restructing plans currently under discussion with the U.S. Treasury Department, Chrysler and General Motors have indicated that a number of well known brands will be dropped, including the Dodge Durango, PT Cruiser, Hummer, Saturn, Saab, and others.

Read News Story from CNNMoney.com

Related News: Senator Says U.S. Should Consider Chrysler/Fiat

PROMISES, PROMISES: Web Site Likely to Fall short

By PHILIP ELLIOTT | Associated Press

WASHINGTON – President Barack Obama promised taxpayers they could track each of the billions and billions of dollars in spending Congress has approved to stimulate the nation’s flailing economy and save its banks. It’s a promise that’s going to be difficult, if not impossible, to keep.

Obama, whose presidential campaign harnessed technology to identify supporters and track voters, already has rewritten the rules on how technology can be used to shape public opinion. But as the president and his top aides attempt to turn that savvy into governing, they are finding that existing technology and regulations are making it difficult for them to keep their word.

“We’re actually going to set up something called Recovery.gov. This is going to be a special Web site we set up, that gives you a report on where the money is going in your community, how it’s being spent, how many jobs it’s being created so that all of you can be the eyes and ears,” Obama told an audience last week in Indiana.

“And if you see that a project is not working the way it’s supposed to, you’ll be able to get on that Web site and say, ‘You know, I thought this was supposed to be going to school construction, but I haven’t noticed any changes being made.’ And that will help us track how this money is being spent.”

Except that it didn’t work exactly as Obama suggested when the Web site went live Tuesday as Obama signed the $787 billion economic stimulus package into law …

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G7 Finance Ministers Reject Protectionist Measures

By COLLEEN BARRY and ARIEL DAVID | Associated Press

ROME – The Group of Seven finance ministers pledged Saturday to avoid resorting to protectionism as they try to stimulate their own economies in the face of the world’s worst economic crisis since the 1930s.

The meeting marked the international debut of U.S. Treasury Secretary Timothy Geithner, who assured his counterparts that President Barack Obama’s $787 billion plan to resuscitate the economy, approved Friday, would not violate in any way the United States’ commitment to free trade.

Geithner, who was among friends and colleagues he had worked with from his days at the Federal Bank, appealed to the “common imperative” to sustain open trade.

“These are global challenges and it is imperative that we work together to address them,” Geithner told reporters afterward. “Effective global response will require sustained action by governments working with the international financial institutions.”

The meeting’s host, Italian Finance Minister Giulio Tremonti, affirmed “strong agreement” among the ministers on rejecting protectionism …

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Related News: China Criticizes ‘Buy American’ Provision in U.S. Stimulus Bill

For Senators, Tax Questions are Taxing

By POLITICO STAFF

When Timothy Geithner appeared before the Senate Finance Committee last month, Sen. Jon Kyl (R-Ariz.) accused the soon-to-be treasury secretary of “dancing around” questions about his taxes.

When news broke that Tom Daschle had failed to pay taxes due on a car and driver, Sen. John Cornyn (R-Texas) declared himself “very troubled by it.”

But neither Kyl nor Cornyn seems interested in answering questions about his own tax history.

They’re hardly alone.

Last week, Politico asked the offices of all 99 sitting senators to say who prepares their taxes, whether they or the Internal Revenue Service has ever discovered an error on returns they’ve filed, and whether they’ve ever had to pay back taxes …

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Geithner Calls for up to $2 Trillion

By VICTORIA MCGRANE & LISA LERER | Politico

Treasury Secretary Timothy Geithner vowed on Tuesday to jumpstart the nation’s financial system, announcing sweeping new plans to aid struggling banks, spur lending and help beleaguered homeowners.

The program will commit as much as $2 trillion in public and private funds to spur consumer and business lending.

Geithner christened the administration’s revamped bailout program the “Financial Stability Plan,” a not-so-subtle attempt to distance the new Obama administration from the much-maligned management of the “Troubled Asset Relief Program” established in the waning days of the Bush administration.

“To get credit flowing again, to restore confidence in our markets, and restore the faith of the American people, we are fundamentally reshaping the government’s program to repair the financial system,” Geithner said during a speech at the Treasury Department.

As he spoke, the Dow Jones Industrial Average dropped nearly 200 points …

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Related News: Stocks Plunge as Government Unveils Bailout Plan