Geithner: Banks Must Modify Loans
money.cnn.com — U.S. Treasury Secretary Timothy Geithner told lawmakers that financial institutions that receive government assistance will have to make loan modifications and meet other new standards, according to Democratic sources. Geithner, during a briefing with House Democrats, was asked about a New York Times report that the Obama administration would not require banks to increase their lending as part of revamped government effort to restore stability to the financial industry. According to the sources, who asked not to be identified, Geithner said: “We are not doing what they wrote … Institutions that get assistance will have to participate in loan modifications and meet other standards that we set.” “Public assistance is a privilege, not a right,” the sources said Geithner told lawmakers.
latimes.com — They have plundered reserves, enacted hiring freezes and engaged in all manner of budgetary voodoo to shield us from the pain. But now state governments — reeling from a historic free fall in tax revenue — have run out of tricks. And Americans are about to feel it. In some cases, they already have. The budget-cutting plans that have emerged from state capitols so far have a potential effect on almost everyone. Parks will close. Environmental programs will be scaled back. Bus and ferry routes will shut down, possibly sending more drivers onto clogged streets and highways. Schools may go without school nurses, and classes may become more crowded. Sick people who rely on state health programs may instead get sicker.
Stimulus Could Aid Colleges, Students
hosted.ap.org — The stimulus plan emerging in Washington could offer an unprecedented, multibillion-dollar boost in financial help for college students trying to pursue a degree while they ride out the recession. It could also hand out billions to the states to kick-start idled campus construction projects and help prevent tuition increases at a time when families can least afford them. But cuts of $40 billion for state and local governments in the Senate version were a big disappointment for college leaders. House-Senate negotiations will determine whether education aid to the states is relatively modest or massive. Students are big winners. Both the House and Senate bills call for the largest-ever funding increase for Pell Grants, the government’s chief college aid program for low-income students.
Iraq, Afghanistan Withdrawals Delayed
cnn.com — Decisions about withdrawing troops from Iraq and sending more troops to Afghanistan have been delayed until the Pentagon provides President Barack Obama with more detail about the risks and implications of the issues confronting him, according to two senior Pentagon officials. Both officials, who asked not to be named because of the sensitivity of the issue, have a direct understanding of the discussion regarding troop withdrawals. They said the military is not concerned about the delays, but that there is concern about the deteriorating levels of security in Afghanistan. The officials confirmed that the Pentagon and U.S. Central Command are now working on three Iraq combat troop withdrawal options for the president: 16 months, 19 months and 23 months.
Bailout to Rely in Part on Private Money
nytimes.com — Wall Street helped produce the global financial and economic crisis. Now, as the Obama administration prepares to unveil a revised bailout plan for the banking system, policy makers hope Wall Street can be part of the solution. Administration officials said the plan was likely to depend in part on the willingness of private investors other than banks — like hedge funds, private equity funds and perhaps even insurance companies — to buy the contaminating assets that wiped out the capital of many banks. The officials say they are counting on the profit motive to create a market for those assets. The aim is to reduce the need for federal financing and relieve fears risk to taxpayers.
Congress Maps Talks on Stimulus
nytimes.com — With Congressional leaders hoping to deliver legislation to President Obama by next Monday, staff workers for the appropriations and tax writing committees in both chambers were not waiting for the Senate to act before comparing the two measures. Formal talks will not begin before the Senate passes its $827 billion version of the plan; the House bill costs about $819 billion. The Senate agreement on a scaled-down bill was reached on Friday when three Republicans signaled that they would back the legislation. Their support would give the Democratic majority the 60 votes needed to clear a procedural hurdle. But Congressional Democrats and the White House were still hoping to pick up more Republicans.
Economists: Time of the Essence for Stimulus
washingtonpost.com — With Congress moving closer to adopting a $820 billion stimulus package and the Obama administration poised to unveil a new bank bailout plan, economists say that the federal government is taking its biggest role in the economy in a generation. While economists remain divided on the role of government generally, an overwhelming number from both parties are saying that a government stimulus package — even a flawed one — is urgently needed to help prevent a steeper slide in the economy. Many economists say the precise size and shape of the package developing in Congress matter less than the timing, and that any delay is damaging.
