2009/02/11

Morning News Roundup - February 11, 2009




Bankers to appear before dubious Congress

...Eight chief executives will slip behind a witness table in the Rayburn House Office Building on Wednesday morning to face a battery of questions about how they have used more than $160 billion in taxpayers' money.
In prepared testimony, the CEOs applauded the program for making more loans available and promised to pay their share of the money back to the Treasury over time.
...At least one banker sounded almost contrite.
"Many people believe — and, in many cases, justifiably so — that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system's stability," said Lloyd C. Blankfein, chairman and CEO of The Goldman Sachs Group Inc.
Geithner's highly awaited overhaul of the rescue program would leverage more than $2 trillion for the banking system and impose stricter accountability standards on banks and their executives. But it wasn't enough to dispel Wall Street anxieties or silence congressional doubters.
..."I have to be honest with you," Sen. Robert Menendez, D-N.J., told him. "A lot of questions still remain unanswered. A lot of details are necessary before I can give it my support."
Those doubts are sure to arise Wednesday when Blankfein and the CEOs of Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., Wells Fargo and Co., Morgan Stanley, State Street Corp. and the Bank of New York Mellon appear before the House Financial Services Committee.
... A government watchdog reported last week that the Treasury under Bush overpaid the banks for the assets it obtained in exchange for the capital infusion.
...Wells Fargo, which acquired Wachovia on Dec. 31, reported that it had reopened lines of credit to some Wachovia customers who had been denied credit. It also reported $22 billion in new loan commitments and $50 billion in mortgages in the last quarter of 2008.



Negotiators hoped to seal agreement on President Barack Obama's economic stimulus package Wednesday after making good progress in the first rounds of closed-door talks.
Obama's negotiating team insisted on restoring some lost funding for school construction projects as talks began Tuesday in hopes of striking a quick agreement, but by late in the day it appeared resigned to losing up to $40 billion in aid to state governments.
Earlier Tuesday, the Senate sailed to approval of its $838 billion economic stimulus bill, but with only three moderate Republicans signing on and then demanding the bill's cost go down when the final version emerges from negotiations.
..."That's in the ballpark," Senate Finance Committee Chairman Max Baucus, D-Mont., said of the $800 billion figure late Tuesday.
Baucus had said earlier that $35.5 billion to provide a $15,000 homebuyer tax credit, approved in the Senate last week, would be cut back. There was also pressure to reduce a Senate-passed tax break for new car buyers, according to Democratic officials.
Within hours of the 61-37 Senate vote, White House Chief of Staff Rahm Emanuel and other top Obama aides met in the Capitol with Democratic leaders as well as moderate senators from both parties whose support looms as crucial for any eventual agreement.
House Democratic leaders promised to fight to restore some of $16 billion for school construction cut by the Senate. Those funds could create more than 100,000 jobs, according to Will Straw, an economist at the liberal Center for American Progress.
...House leaders are tempering expectations that they'll restore many of the cuts.
"You cannot allow the perfect to be the enemy of the effective and of the necessary, and we will not," said House Speaker Nancy Pelosi, D-Calif.
While they're fighting to preserve cuts to Obama priorities, Specter is fighting to preserve an enormous $10 billion increase for the National Institutes of Health, while Collins obtained $870 million for community health centers in talks last week.




If the House version of the federal stimulus package becomes law, Ohio will save 300 youth services jobs, 130 more in addiction counseling and at least 20 positions for aides who provide a respite to relatives of Alzheimer's patients. It would mean keeping as many as 8,000 children in state-supported child care and saving 500 corrections jobs in a state where prisons are well over capacity.
If the Senate version triumphs, all of those jobs and subsidies -- plus many more -- will disappear, said Gov. Ted Strickland (D), who has joined with other governors to press members of Congress to back the more generous House approach.
The two chambers began to resolve their differences yesterday on how much money to send to states and other sticking points, after the Senate passed an $838 billion stimulus package. Senate and House leaders played down discrepancies between the two versions, saying that both would provide a boost to the economy and that an agreement on a final bill could come as soon as the end of the week.
But for states, the differences are potentially enormous. The House included $79 billion in direct aid to states, $40 billion more than the Senate, and governors are counting on that money to help balance budgets that are billions in the red.
...The Senate halved the $79 billion as part of a deal to win the support of centrists in both parties who doubted the value and necessity of untargeted aid to states. Some Republicans also had ideological objections, based on a belief in tax cuts and skepticism about expanding the federal government's role in local projects such as school construction.
...The House bill provided $39 billion for state education budgets, $15 billion for incentive grants and innovation, and $25 billion that governors could use at their discretion. The Senate cut the education aid to $31.3 billion and the incentive money to $7.5 billion, and it eliminated the $25 billion in discretionary funding.
...In the budget he delivered this month, Strickland estimated that Ohio would receive $3.4 billion from the federal government for general expenses over the next two years. If the Senate version passes, he said, that number would drop to $2.5 billion or less.
Strickland's office reported that without the extra money, 51,000 fewer Ohioans would receive mental health services, 40 percent of college students would pay more tuition and 17,000 needy young people would not get help.
Washington Gov. Chris Gregoire (D) worried that $500 million in aid not included in the Senate version would mean cuts in higher education, human services and corrections. Special assistant Dick Thompson described the governor's staff as "pretty disappointed" but not giving up.







Israeli parties reject power-sharing compromise
Senior members of Israel's Kadima and Likud parties, which finished nearly even in Tuesday's general election, rejected the idea of a rotating premiership.
While Kadima won one more seat than Likud (28-27) in the next Knesset, overall the right-wing bloc ended much stronger than Livni's allied parties on the left (65-44), leaving much confusion over whom President Shimon Peres should choose to form the next government.
Israel solved a similar situation following the 1984 general election by forming a unity coalition between Likud and Labor that saw Yitzhak Shamir and then-Labor leader Peres serve two years each as prime minister.
But senior Kadima lawmaker Meir Sheetrit told Army Radio on Wednesday that such a solution today would be a gimmick at the expense of the Israeli public, and is rejected by his party.
Silvan Shalom, number 2 on the Likud list, told Army Radio that his party also sees no need for a power-sharing government, since such solutions are only called for when there is an equal balance between right and left, and Tuesday's election clearly put the right-wing on top.


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