Daniel Wagner, AP Business Writer, On Monday August 30, 2010, 4:55 pm
WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke will testify this week about his role in the bank bailouts that sent billions of taxpayer dollars to banks deemed "too big to fail."
Bernanke will testify Thursday before the bipartisan Financial Crisis Inquiry Commission. The panel was created by Congress to investigate the roots of the financial panic that rocked Wall Street and the global economy starting in 2008.
Bernanke and other officials considered the banks "too big to fail" because they feared the banks' failures could spread panic and bring down the broader financial system. The government rescued insolvent companies such as Bear Stearns, Merrill Lynch and American International Group Inc. by brokering their sale to competitors or putting them under government control.
Bernanke was a key architect of the bailouts. He worked closely with former Treasury Secretary Henry Paulson and Treasury Secretary Timothy Geithner, who was president of the Federal Reserve Bank of New York at the time. Geithner and Paulson already have testified before the FCIC.
Bernanke and Geithner have argued that the problem of "too big to fail" was solved by a sweeping overhaul of financial rules that was signed into law this summer. The law includes a process for shuttering big, complex financial companies using a money from investors and loans from the Treasury Department.
Critics say the change will not prevent future bailouts. They point out that the biggest banks grew larger as the government pushed them to absorb smaller players.
The hearings also will include testimony from Federal Deposit Insurance Corp. Chairman Sheila Bair and Dick Fuld, who was CEO of Lehman Bros. when it filed for bankruptcy protection.
Monday, August 30, 2010
Thursday, August 26, 2010
Stocks slip as caution about the economy returns
Stephen Bernard, AP Business Writer, On Thursday August 26, 2010, 5:41 pm EDT
NEW YORK (AP) --
Stocks fell Thursday after early gains from a better report on jobless claims ebbed. The Dow Jones industrial average closed below 10,000 for the first time since early July.
The Dow lost 74 points, having been up as much as 45 earlier. The market has struggled to hold on to gains in recent trading as many investors remain unconvinced that the economic recovery will hold.
Stocks have been on a generally declining trend in August after charging ahead in July. A bevy of poor indicators on the economy, especially weak home sales, has pierced a sense of optimism brought about by a series of strong corporate earnings reports the month before. The Dow has lost ground in five of the past six trading sessions, and has shed 430 points over that time.
The market enjoyed a brief reprieve from that malaise early Thursday thanks to an encouraging sign on the job market. The Labor Department reported that first-time claims for jobless benefits fell last week after three straight weekly increases.
Now, it's up to Ben Bernanke to provide the next clues on the economy. The Federal Reserve chairman is delivering a speech early Friday that investors hope will shed light on how weak the U.S. economy really is and whether the Fed may take more steps to revive it.
Peter Cardillo, chief market economist at Avalon Partners Inc., said the market wants to see whether "the pulse of the Fed is beating at a fast rate with anxiety over the economy."
The Dow fell 74.25, or 0.7 percent, to 9,985.81. The Dow had traded below 10,000 several times this week, but hadn't closed below that level since July 6.
Broader market barometers also fell. The Standard & Poor's 500 fell 8.11, or 0.8 percent, to 1,047.22, while the Nasdaq fell 22.85, or 1.1 percent, to 2,118.69.
Falling stocks outpaced rising ones two-to-one on the New York Stock Exchange, where consolidated volume came to a very light 3.8 billion shares.
First-time claims for unemployment benefits dropped to 473,000 last week, a bigger drop than analysts expected. First-time claims had jumped ominously the week before, going above 500,000 for the first time since November.
The latest jobless claims report suggests that hiring remains weak. In a healthy economy, weekly claims usually fall below 400,000. At the height of the recession in March 2009, weekly claims peaked at 651,000.
Treasury prices rose, sending interest rates lower, after the glow from the positive report on jobless claims waned. The yield on the 10-year Treasury note dipped to 2.48 percent from 2.54 percent late Wednesday. Its yield helps set interest rates on mortgages and other consumer loans.
Long-term bond yields are hovering around levels not recorded since early 2009, when the country was in the depths of the recession and stocks hit 12-year lows.
European markets got a lift from an improved consumer confidence reading on Germany's economy. Germany's DAX index rose 0.2 percent. France's CAC-40 climbed 0.7 percent and Britain's FTSE 100 rose 0.9 percent.
NEW YORK (AP) --
Stocks fell Thursday after early gains from a better report on jobless claims ebbed. The Dow Jones industrial average closed below 10,000 for the first time since early July.
The Dow lost 74 points, having been up as much as 45 earlier. The market has struggled to hold on to gains in recent trading as many investors remain unconvinced that the economic recovery will hold.
Stocks have been on a generally declining trend in August after charging ahead in July. A bevy of poor indicators on the economy, especially weak home sales, has pierced a sense of optimism brought about by a series of strong corporate earnings reports the month before. The Dow has lost ground in five of the past six trading sessions, and has shed 430 points over that time.
The market enjoyed a brief reprieve from that malaise early Thursday thanks to an encouraging sign on the job market. The Labor Department reported that first-time claims for jobless benefits fell last week after three straight weekly increases.
Now, it's up to Ben Bernanke to provide the next clues on the economy. The Federal Reserve chairman is delivering a speech early Friday that investors hope will shed light on how weak the U.S. economy really is and whether the Fed may take more steps to revive it.
Peter Cardillo, chief market economist at Avalon Partners Inc., said the market wants to see whether "the pulse of the Fed is beating at a fast rate with anxiety over the economy."
The Dow fell 74.25, or 0.7 percent, to 9,985.81. The Dow had traded below 10,000 several times this week, but hadn't closed below that level since July 6.
Broader market barometers also fell. The Standard & Poor's 500 fell 8.11, or 0.8 percent, to 1,047.22, while the Nasdaq fell 22.85, or 1.1 percent, to 2,118.69.
Falling stocks outpaced rising ones two-to-one on the New York Stock Exchange, where consolidated volume came to a very light 3.8 billion shares.
First-time claims for unemployment benefits dropped to 473,000 last week, a bigger drop than analysts expected. First-time claims had jumped ominously the week before, going above 500,000 for the first time since November.
The latest jobless claims report suggests that hiring remains weak. In a healthy economy, weekly claims usually fall below 400,000. At the height of the recession in March 2009, weekly claims peaked at 651,000.
Treasury prices rose, sending interest rates lower, after the glow from the positive report on jobless claims waned. The yield on the 10-year Treasury note dipped to 2.48 percent from 2.54 percent late Wednesday. Its yield helps set interest rates on mortgages and other consumer loans.
Long-term bond yields are hovering around levels not recorded since early 2009, when the country was in the depths of the recession and stocks hit 12-year lows.
European markets got a lift from an improved consumer confidence reading on Germany's economy. Germany's DAX index rose 0.2 percent. France's CAC-40 climbed 0.7 percent and Britain's FTSE 100 rose 0.9 percent.
Scarcity of jobs puts more at risk of foreclosure
Alan Zibel and Christopher S. Rugaber, AP Business Writers, On Thursday August 26, 2010, 10:10 pm
WASHINGTON (AP) -- The jobs crisis is putting more Americans at risk of losing their homes.
One in 10 households has missed at least one mortgage payment, and more than 2 million homes have been repossessed since the recession began. Few expect the outlook to improve until companies start to hire steadily again and layoffs ease.
And while there was some good news Thursday -- a modest decrease in the number of Americans filing for jobless benefits for the first time in a month -- the figure is still too high to bring down the unemployment rate.
So the housing crisis goes on, even though the average rate on a 30-year mortgage fell again this week to an all-time low of 4.36 percent.
"Ultimately, the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story," said Jay Brinkmann, the top economist for the Mortgage Bankers Association.
It's just one of the problems confronting Federal Reserve chief Ben Bernanke as he speaks Friday at a closely watched conference in Jackson Hole, Wyo. The Fed has mostly exhausted its ammo to give the economy a jolt.
Just under 10 percent of homeowners are delinquent on at least one mortgage payment as of June 30, according to a quarterly report on delinquencies released by Brinkmann's trade group. That's more than double the level before the recession.
The percentage of mortgage borrowers receiving foreclosure notices did fall slightly from the previous quarter, the first drop in four years. And the percentage of loans receiving their first notice of foreclosure also dipped.
But many experts say the situation is getting worse. July was the worst month on record for new home sales and the worst in 15 years for sales of previously occupied homes.
The supply of unsold homes on the market keeps getting bigger. At the same time, the growing number of foreclosures keeps pushing down home prices and scaring potential buyers and sellers from the market.
More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. And 6 million more will be lost to foreclosure over the next three years, by some estimates.
If that happens, home prices will probably sink further, and the economy will suffer. Builders will keep construction to a minimum, and Americans will be less willing to spend because of their lost home values.
"Housing is certainly not going to help the recovery," said Michelle Meyer, a Bank of America economist. "It threatens to hinder it."
A major problem is that many people have homes that are now worth less than they owe on their mortgages. Approximately 11 million homeowners, or 23 percent of those with a mortgage, were "underwater" as of the end of June, real estate data provider CoreLogic reported Thursday. Nevada had the highest number of any state, with 68 percent.
The number of "underwater" mortgages was down from the previous quarter -- but only because homes are being repossessed by lenders.
The number of Americans missing payments and falling into foreclosure has gone up along with unemployment. The jobless rate has remained near double digits all year.
First-time requests for unemployment benefits fell last week to a seasonally adjusted 473,000. It was the first decline in a month and came one week after the number hit the half-million mark -- the highest level in nine months.
Even with last week's decline, though, the four-week average in unemployment claims, which evens out the week-to-week volatility, rose to 486,750, the most since November 2009. In a healthy economy that number is more like 400,000.
Losing a job or having health problems that lead to high medical bills are among the reasons many people fall behind in their mortgage payments.
Toni Cloyd experienced both and fell behind twice on her monthly mortgage payment of $2,200 -- first in 2006 after undergoing surgery and again in 2008 after she lost a job and was out of work for six months.
The Denver woman says she tried to catch up. She enrolled in the Obama administration's main program to help homeowners at risk of foreclosure by lowering their monthly payments. She says she made payments that were never applied, and the bank is still demanding $98,000 in missed payments, lawyer's bills and late fees.
Bank of America says she never provided proper documents and was not approved for the mortgage modification.
The end result came earlier this month. She pulled into the driveway and was embarrassed to find a foreclosure notice tacked to her door.
"It makes us appear to be deadbeats," she said. "We've done everything that we possibly could to resolve this."
Like Cloyd, nearly half of the 1.3 million homeowners who have enrolled in Obama administration program have been cut loose through July, the Treasury Department said last week. The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments.
AP Real Estate Writers J.W. Elphinstone in New York and Alex Veiga in Los Angeles contributed to this report.
WASHINGTON (AP) -- The jobs crisis is putting more Americans at risk of losing their homes.
One in 10 households has missed at least one mortgage payment, and more than 2 million homes have been repossessed since the recession began. Few expect the outlook to improve until companies start to hire steadily again and layoffs ease.
And while there was some good news Thursday -- a modest decrease in the number of Americans filing for jobless benefits for the first time in a month -- the figure is still too high to bring down the unemployment rate.
So the housing crisis goes on, even though the average rate on a 30-year mortgage fell again this week to an all-time low of 4.36 percent.
"Ultimately, the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story," said Jay Brinkmann, the top economist for the Mortgage Bankers Association.
It's just one of the problems confronting Federal Reserve chief Ben Bernanke as he speaks Friday at a closely watched conference in Jackson Hole, Wyo. The Fed has mostly exhausted its ammo to give the economy a jolt.
Just under 10 percent of homeowners are delinquent on at least one mortgage payment as of June 30, according to a quarterly report on delinquencies released by Brinkmann's trade group. That's more than double the level before the recession.
The percentage of mortgage borrowers receiving foreclosure notices did fall slightly from the previous quarter, the first drop in four years. And the percentage of loans receiving their first notice of foreclosure also dipped.
But many experts say the situation is getting worse. July was the worst month on record for new home sales and the worst in 15 years for sales of previously occupied homes.
The supply of unsold homes on the market keeps getting bigger. At the same time, the growing number of foreclosures keeps pushing down home prices and scaring potential buyers and sellers from the market.
More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. And 6 million more will be lost to foreclosure over the next three years, by some estimates.
If that happens, home prices will probably sink further, and the economy will suffer. Builders will keep construction to a minimum, and Americans will be less willing to spend because of their lost home values.
"Housing is certainly not going to help the recovery," said Michelle Meyer, a Bank of America economist. "It threatens to hinder it."
A major problem is that many people have homes that are now worth less than they owe on their mortgages. Approximately 11 million homeowners, or 23 percent of those with a mortgage, were "underwater" as of the end of June, real estate data provider CoreLogic reported Thursday. Nevada had the highest number of any state, with 68 percent.
The number of "underwater" mortgages was down from the previous quarter -- but only because homes are being repossessed by lenders.
The number of Americans missing payments and falling into foreclosure has gone up along with unemployment. The jobless rate has remained near double digits all year.
First-time requests for unemployment benefits fell last week to a seasonally adjusted 473,000. It was the first decline in a month and came one week after the number hit the half-million mark -- the highest level in nine months.
Even with last week's decline, though, the four-week average in unemployment claims, which evens out the week-to-week volatility, rose to 486,750, the most since November 2009. In a healthy economy that number is more like 400,000.
Losing a job or having health problems that lead to high medical bills are among the reasons many people fall behind in their mortgage payments.
Toni Cloyd experienced both and fell behind twice on her monthly mortgage payment of $2,200 -- first in 2006 after undergoing surgery and again in 2008 after she lost a job and was out of work for six months.
The Denver woman says she tried to catch up. She enrolled in the Obama administration's main program to help homeowners at risk of foreclosure by lowering their monthly payments. She says she made payments that were never applied, and the bank is still demanding $98,000 in missed payments, lawyer's bills and late fees.
Bank of America says she never provided proper documents and was not approved for the mortgage modification.
The end result came earlier this month. She pulled into the driveway and was embarrassed to find a foreclosure notice tacked to her door.
"It makes us appear to be deadbeats," she said. "We've done everything that we possibly could to resolve this."
Like Cloyd, nearly half of the 1.3 million homeowners who have enrolled in Obama administration program have been cut loose through July, the Treasury Department said last week. The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments.
AP Real Estate Writers J.W. Elphinstone in New York and Alex Veiga in Los Angeles contributed to this report.
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