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From the category archives:
TARP
Obama ‘Agnostic’ on Deficit Cuts, Won’t Prejudge Tax Increases
Written By: Rich Miller
President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit.
Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.
“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. “So what I want to do is to be completely agnostic, in terms of solutions.”
Obama repeatedly vowed during the 2008 presidential election campaign that he would not raise taxes on individuals making less than $200,000 and households earning less than $250,000 a year. When senior White House economic adviser Lawrence H. Summers and Treasury Secretary Timothy F. Geithner suggested in August that the administration might be open to going back on that pledge, White House press secretary Robert Gibbs quickly reiterated the president’s promise.
Bailout panel cites commercial real estate danger
Over the next several years, failed commercial real estate loans could litter American cities with empty stores and office complexes, cause hundreds of bank failures and weaken the economy, a watchdog report says.
Banks face up to $300 billion in losses on loans made for commercial property and development, according to a report released Thursday by the Congressional Oversight Panel. The panel monitors the government’s efforts to stabilize the financial system.
The report says the defaults could lead to reduced lending and cause the eviction of families from rental properties. Bank failures also could contribute to job losses and hurt the economic recovery.
Fed in Talks With Money Market Funds to Help Drain $1 Trillion
Written By: Craig Torres and Christopher Condon
The Federal Reserve is in talks with money-market mutual funds on agreements to help drain as much as $1 trillion from the financial system as policy makers prepare for the first interest-rate increase since June 2006, according to a person familiar with the discussions.
The central bank is looking to the $3.2 trillion money- market mutual-fund industry because the 18 so-called primary dealers that trade directly with the Fed have a capacity limited to about $100 billion, estimates Joseph Abate, a money-market strategist at Barclays Capital in New York.
Money-market funds may welcome the opportunity to trade with the Fed after the financial crisis reduced the supply of safe assets in which they can invest. In one example of demand for such assets, auctions on four-week Treasury bills have attracted an average of $5.47 in bids for every dollar sold this year, compared with an average of $3.77 last year, according to Bloomberg data. Yields on the four-week bill fell to five basis points from 20 basis points a year ago.
Job growth may not curb unemployment rate: WHouse
A new White House economic forecast showed Thursday the US economy is set to start producing job growth this year at a rate of 95,000 per month, but that the unemployment rate will remain high.
President Barack Obama’s annual economic report to Congress said the economy is on the verge of pulling out of a period of steep job losses stemming from the worst recession in decades.
But the report also said that the unemployment rate may not come down much from the current level of 9.7 percent, and may even rise because of labor market growth and the return of more discouraged workers to the labor force.
Announcing the new U.S. policy to curb illegal immigration: Make the U.S. economy less attractive to potential illegal immigrants.
US: 7 percent fewer illegal immigrants last year
The number of illegal immigrants in the United States fell by seven percent last year to 10.8 million, coinciding with the country’s financial crisis, a Department of Homeland Security report said Tuesday.
Polk school district to give iPods to some parents
The Polk County school district is giving away iPods to some parents.
The school district is using the device to reward parents of children with disabilities who fill out a 10-minute online survey. The district wants to know how well it’s connecting with the parents and how to get parents involved in their children’s education.
The district is spending about $350,000 in federal stimulus money for the iPods.
The district has more than 10,000 students with disabilities.
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Obama Offers Budget With Deficits As Far as Number-Crunchers Can See
Written By: Fox News’ Major Garrett and Chad Pergram contributed to this report.
As President Obama prepares to unveil his $3.8 trillion budget for fiscal year 2011, which begins Oct. 1, the White House is projecting the current fiscal year will end with a $1.6 trillion deficit, congressional sources confirmed to Fox News.
Next year’s budget will have a nearly $1.3 trillion debt, according to those sources, dropping to just over half that — $700 billion in fiscal year 2013 — before jumping back up to $1 trillion in 2020, the furthest out that budgeters will predict.
A $1.6 trillion deficit would represent more than 10 percent of the gross domestic product, but the White House says over the next 10 years, the average deficit will represent only 4.5 percent of GDP annually. Last year’s deficit was $1.42 trillion.
The numbers come as the president and congressional Democrats have pivoted from preparing a $1 trillion health care proposal to focusing on jobs and the deficit. Speaking at the State of the Union last week, Obama told a joint session of Congress that he wants to freeze spending — beginning in 2012 — on discretionary spending except the military, veterans and homeland security. The president said that would save $250 billion over 10 years.
Obama Jobs Program Could Cost $100 Billion
President Obama’s push to create jobs may carry a price tag in the $100 billion range, his top spokesman said Sunday.
White House spokesman Robert Gibbs said the idea is to help fill in the hole from jobs lost in the deepest recession to hit the country in decades.
Watchdog: Bank Bailouts Created More Risk in System
The government’s bailout of financial institutions deemed “too big to fail” has created a risk that the United States could face a worse fiscal meltdown in the future, an independent watchdog assigned to review the program told Congress on Sunday.
The Troubled Assets Relief Program, known as TARP, has not addressed the problems that led to the last crisis and in some case those problems have festered and are a bigger threat than before, warned Neil Barofsky, the special inspector general at the Treasury Department.
“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,” Barofsky wrote.
Barofsky wrote the $700 billion financial bailout has encouraged more risk-taking because bank executives, who are still receiving massive bonuses, figure the government will come to the rescue the next time they steer their ships nearly aground.
“The market mentality now seems fixed that the U.S. government will continue to step in and bail out giant financial institutions,” said Sen. Susan Collins, R-Maine, ranking member of the Senate Homeland Security and Governmental Affairs Committee. “The IG’s findings confirm my decision to oppose releasing $350 billion in TARP funds last year and my recent vote to terminate the program altogether.”
“The SIGTARP’s report is just another reminder of how Congress and the administration have ignored the role that politics and government played in causing the housing crisis and the economic collapse while pursing other regulatory reforms will not fix the underlying problem,” said Rep. Darrell Issa, R-Calif., the ranking member on the House Oversight and Government Reform Committee.
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Uncle Sam is on the verge of losing his financial reputation:
Senate minority leader reacts to Obama blasting GOP for running up deficit:
Senator criticizes president’s plans to spend TARP cash and says Obama ‘doesn’t know how to run a business’:
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According to a audit report made public today by The Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), “senior government officials”, appointed by the Bush Administration, deceived the American public last fall when they claimed that the nine financial institutions to first receive TARP funds were healthy.
Special Inspector General Neil Barofsky, is in charge of The Office of the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP.
While announcing the initial $125 billion TARP injection to these nine financial institutions on October 14 of 2008, then Treasury Secretary Henry Paulson declared, “These are healthy institutions, and they have taken this step for the good of the U.S. economy. As these healthy institutions increase their capital base, they will be able to increase their funding to U.S. consumers and businesses.”
SIGTARP’s audit report questions Paulson’s declaration of the financial institutions’ health when it was abundantly apparent that “senior government officials had affirmative concerns about the health of at least some of these institutions.”
You can find the audit report here: Emergency Capital Injections Provided to Support the Viability of Bank of America, Other Major Banks, and the U.S. Financial System
Appendix H includes comments about the report from the Federal Reserve Board and Appendix I includes comments from the Treasury Department.
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