Obama Mortgage Relief Plan Is 'Lifeline' To MillionsOn Wednesday, President Barack Obama outlined his housing relief plan, which was welcome news to the millions of homeowners near foreclosure. The initial cost of the plan is estimated to be $75 billion and is aimed to first help homeowners who owe more than their house is worth refinance. President Obama's program is aimed at a problem many analysts say has been at the heart of the country's economic nosedive.
HUD Secretary Shaun Donovan and FDIC Chairman Sheila Bair both appeared on national morning news programs on Thursday, calling for banks to 'step up' on foreclosure. Bair has been calling for a change in mortgage structuring for more than two years and had warned of the now huge problem of extensive foreclosures and more than 12 million homes "under water," or having mortgages more than the home is valued at in the current depressed housing market.
The administration also announced an added $200 billion in government funding for mortgage giants Freddie Mac and Fannie Mae. These moves are part of an increased effort to encourage lending institutions to refinance homes for millions of homeowners underwater. Several large banks have already stated moratoriums on foreclosures through the end of March to help homeowners find relief.
Donovan says one group of buyers who should not benefit from the refinancing efforts that will begin in March is investor owners who do not occupy the homes. One other key part of the program, he says, is that the mortgage refinancing program will only be made available to those homeowners with good credit.
February Sees Record Jobless Claims
The total number of U.S. workers who continue to claim unemployment benefits jumped to a record high in the first week of February, according to the Labor Department's latest report. New claims for unemployment insurance last week were unchanged, but still at a high level.
State unemployment benefit initial claims, seasonally adjusted, were unchanged in the second week of February at 627,000. The Labor Department says these new claims are close to a 26-year high.
The number of people remaining on the unemployment rolls after drawing an initial week of aid rose 170,000 to 4.987 million in the week ended February 7. These numbers are the highest on records that date back to 1967.
The four-week moving average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, rose to 619,000, the highest since 1982, from the previous week's total of 608,500.
SEC's Stanford Charges Causes Run on Bank
The prime minister of Antigua urged citizens to remain calm after the country's largest private employer was hit with fraud charges on Tuesday. After the news that Texas billionaire Robert Allen Stanford was charged by the Securities and Exchange Commission of creating an $8 billion fraud in his company's investments, a run on the Stanford Bank ensued.
The SEC raided the billionaire's offices in Houston on Tuesday and froze the assets of three companies Stanford controls. Antigua's PM Baldwin Spencer says the government is working on a contingency plan to deal with the situation, but released no details.
When the news of Stanford's charges reached St. Johns, dozens of bank customers surrounded a bank controlled by Stanford, but were turned away by bank guards. The bank was not part of the SEC's complaint released on Tuesday. Anxious customers queued up in long lines at both branches of the bank. Baldwin says the Eastern Caribbean Central Bank is working with the Bank of Antigua and told citizens in a radio broadcast there was no need for panic.
The impact of the Stanford fraud case could have wide-reaching effects across the Caribbean, including the potential economic impact and loss of jobs that may result from the investigation. Stanford had earlier said he would build a large office complex on land near the St. Croix airport in the U.S.Virgin Islands.