Posts Tagged ‘Congress



19
Jun
10

Weekly Address: Republicans Blocking Progress

NEWS
Weekly Address: Republicans Blocking Progress
President Obama Says Republicans in Congress Blocking Important Progress

Saturday, June 19, 2010

In this week’s address, President Barack Obama called on Congress to put scoring political points aside, and instead to focus on solving the problems facing the nation. The Republican leadership is currently blocking progress on a bill to boost the economy, retain jobs for teachers and cops, and help people buy their first home; another bill which would hold oil companies accountable for any disasters they cause by removing the current $75 million liability cap; and 136 highly qualified men and women who have been nominated to government positions. In these challenging times, elected leaders in Washington need to remember that they have an obligation that goes beyond upcoming elections – an obligation to care for the next generation.

At this moment, our nation is facing a host of big and difficult challenges. And more than anything else, what’s required to meet those challenges right now is a sense of cooperation and common purpose among our leaders. What we need is a willingness in Washington to put the public’s interests first – a willingness to score fewer political points so that we can start solving more problems.

That’s why I was disappointed this week to see a dreary and familiar politics get in the way of our ability to move forward on a series of critical issues that have a direct impact on people’s lives.

In the United States Senate, we have legislation that would boost our economic recovery and help Americans who’ve been affected by the worst recession in generations. We’ve certainly made progress since we were losing 750,000 jobs per month around the time I took office. Our economy is growing again, and we’ve added jobs for five straight months. But there are still millions of Americans out of work, and millions more who are struggling to pay the bills. The legislation in the Senate right now would extend unemployment benefits to those workers who lost their job through no fault of their own. It would provide relief to struggling states that would help save the jobs of thousands of teachers and cops and firefighters. There are also provisions in this legislation that would extend the tax credit for first-time homebuyers, as well as tax cuts to keep research and development jobs here in the United States.

Unfortunately, the Republican leadership in the Senate won’t even allow this legislation to come up for a vote. And if this obstruction continues, unemployed Americans will see their benefits stop. Teachers and firefighters will lose their jobs. Families will pay more for their first home.

All we ask for is a simple up or down vote. That’s what the American people deserve. Just like they deserve an up or down vote on legislation that would hold oil companies accountable for the disasters they cause – a vote that is also being blocked by the Republican leadership in the Senate. Right now, the law places a $75 million cap on the amount oil companies must pay to families and small businesses who suffer economic losses as a result of a spill like the one we’re witnessing in the Gulf Coast. We should remove that cap. But the Republican leadership won’t even allow a debate or a vote.

And as we speak today, 136 men and women who I’ve nominated for key positions in the federal government are awaiting a vote on the floor of the Senate. All are highly qualified. Very few are controversial. The vast majority already have support from both parties. But most of them are seeing their nominations intentionally delayed by Republican leaders, or even blocked altogether. They cannot get a vote. What this means is that, at a moment when our country is facing so many challenges – a time when we need all hands on deck – we cannot get the qualified people we need to start the jobs they were appointed to do.

Look, the nature of our democracy is that we’ll always have disagreements and debates – even heated ones. That’s healthy and it’s important. But let’s argue over genuine differences – over ideas and policies. And let’s go into those debates with an open mind – a willingness to find common ground and a conviction that, in the end, one way or another, we will have a vote to decide them. Next week, I’ll be meeting with a bipartisan group of Senators to discuss how we can transition away from our dependence on fossil fuels and embrace a clean energy future. I don’t expect that we’ll agree on a solution right away. In fact, I know that there will be plenty of disagreement and different ideas. But at least it shows that Republicans and Democrats can still sit down together in an attempt to tackle the big challenges facing our nation.

I know the political season is upon us in Washington. But gridlock as a political strategy is destructive to the country. Whether we are Democrats or Republicans, we’ve got an obligation that goes beyond caring about the next election. We have an obligation to care for the next generation. So I hope that when Congress returns next week, they do so with a greater spirit of compromise and cooperation. America will be watching.

Thanks.

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• Source(s): The White House
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18
Jun
10

BP CEO Tony Hayward to hand over daily Gulf oil spill operations

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BP CEO Tony Hayward to hand over daily Gulf oil spill operations

Friday, June 18, 2010

BP chief executive Tony Hayward is in the process of handing over day-to-day management of the Gulf oil leak operation to another top manager, Bob Dudley, BP chairman Carl-Henric Svanberg says.

BP announced the appointment of Dudley earlier this month as head of BP’s new disaster management unit, but did not specify a timetable for transferring responsibilies.

In an interview with British broadcaster Sky News, Svanberg said the transfer to Dudley, a U.S. national and managing director of the energy giant, is already occurring.

‘Our focus in the management team has been to close that well, to clean up the beaches and make sure that we compensate those that have suffered, and that has been everything on our agenda,’ he said on Friday.

‘Right after the explosion (Hayward) went out there and he has been leading the response ever since,’ he said. ‘I think everyone believed it to be something we could deal with faster, then he would come back…

‘And now he’s been around for eight weeks, he’s now handing over the daily operations to Bob Dudley, and he will be more home, and be there and be here,’ he told the broadcaster.
The announcement came a day after Hayward, so far BP’s main public face for its clean-up operation, faced a barrage of hostile questions from U.S. lawmakers about the spill that ripped through the BP-leased Deepwater Horizon oil rig.

Hayward, a Briton, has faced growing U.S. anger about a series of blunders in the wake of the April 20 explosion, which killed 11 workers and triggered the worst man-made environmental disaster in U.S. history.

BP has some 23,000 employees in the United States. It also claims about 75,000 retirees from the firm and its subsidiaries and holds more than 500,000 retail shareholders in the country.
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• Source(s): British Petroleum PLC and Sky News / BSkyB / News Corporation
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17
Jun
10

Lawmakers accuse BP chief of evasion over oil spill

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Lawmakers accuse BP chief of evasion over oil spill

Thursday, June 17, 2010

BP boss Tony Hayward has vowed the British energy giant will repair the economic and environmental devastation caused by the Gulf of Mexico oil spill as he was quizzed by irate lawmakers.

‘I know that only actions and results, not mere words ultimately can give you the confidence you seek. I give my pledge as the leader of BP that we will not rest until we make this right,’ a contrite Hayward said on Thursday.

Saying it was too early to pin down the causes of the April explosion on a BP-leased rig off Louisiana, Hayward pledged: ‘We and the entire industry will learn from this terrible event and emerge stronger, smarter and safer.’

Some lawmakers have publicly suggested senior BP officials should ‘commit hara-kiri’ over what has become the nation’s worst ever environmental disaster.

Amid tight security and sitting alone at a table to face congressmen and a media barrage, Hayward was sharply criticised in his first public appearance before Congress since the catastrophe was unleashed on southern U.S. shores.

‘I’m sure you will get your life back, and with a golden parachute back in England. But we in America are left with the terrible consequences of BP’s reckless disregard for safety,’ said Democratic Representative Bart Stupak.
Stupak, who chaired the hearing, was referring to a much-denounced statement in which Hayward, who has been the public face of the disaster, had said he wanted it to end so he could get on with his life.

At one point, a protester disrupted the hearing. ‘You need to be charged with a crime, Tony,’ she shouted. ‘You need to go to jail!’

She grappled with police and kept shouting as she wrestled with police trying to restrain her.

Tensions have been running high with millions of barrels of crude fouling the shorelines of four U.S. states, closing down fishing waters and hitting the region’s vital tourist industry.

On Wednesday BP agreed to set up a $20 billion escrow fund to pay compensation claims from thousands of Gulf businesses and residents facing economic ruin.

The deal was struck after Hayward and BP chairman Carl-Henric Svanberg were summoned to the White House for talks with U.S. President Barack Obama.

News of the escrow fund deal with the U.S. administration sent BP’s share price soaring almost 10 per cent on Thursday, after days of falls sparked by uncertainty over its future.

The fund will be run by prominent lawyer Kenneth Feinberg, who managed compensation claims by victims of the September 11, 2001 terror attacks, and will be overseen by a panel of three judges who can hear appeals.

BP will fund the account in four annual payments of $5 billion, the White House said in a statement, adding it was ‘neither a floor nor a ceiling’ on BP’s total liability for the disaster.

The firm’s final bill will be tied to the amount of oil still spewing into the ocean each day, with U.S. experts putting that figure at between 35,000 and 60,000 barrels.

Hayward told lawmakers BP is now siphoning up an average of 20,000 barrels a day of oil to two processing ships on the surface.

The U.S. disaster coordinator, Admiral Thad Allen, said by ‘sometime early next week’ the company hoped to be containing 28,000 gallons – some of which will be burnt off by one of the surface ships.
And in some good news, Allen said drilling on a relief well, seen as the only way of permanently capping the spill, was ahead of schedule.

‘Mid-August was the target date; they’re actually ahead of schedule right now, but I’m not going to guarantee it will be earlier,’ Allen said, citing the meticulous work needed in carrying out the work safely.

‘We should be very wary about hard deadlines,’ he cautioned.

Analysts said BP, which has spent about $1.6 billion battling the spill and made a profit of about $14 billion in 2009, should be strong enough to weather the storm even if it has to borrow more.

‘They have enough cash flow and quality assets that will allow it to fund that type of liability,’ said Jason Gammel of Macquarie Research.

Amid deepening anger over the spill, Louisiana Representative Joseph Cao told one of Hayward’s colleagues this week that even the resignations of BP officials would not be enough.

‘In the Asian culture we do things differently. During the samurai days, we just give you a knife and ask to you commit hara-kiri,’ he said.
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• Source(s): British Petroleum PLC and Sky News / BSkyB / News Corporation
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12
Jun
10

Weekly Address: Fair Pay for Doctors

NEWS
Weekly Address: Fair Pay for Doctors
President Obama Calls on Senate Republicans to Allow a Vote to Protect Medicare Reimbursements

Saturday, June 12, 2010

In this week’s address, President Barack Obama called on Senate Republicans to stop blocking a vote to prevent a 21 percent pay cut for doctors who see Medicare patients – a pay cut that will hurt America’s seniors and their doctors. Since 2003, Congress, under Republican and Democratic leadership, has deferred these cuts in Medicare reimbursements from going into effect. The President is committed to finding a responsible, long term solution to this problem, but it is not acceptable to punish America’s seniors or the physicians who treat them. If Congress does not act, then doctors will start receiving lower Medicare reimbursements next week, which could lead to seniors losing their doctors.

More than a decade ago, Congress set up a formula that governs how doctors get paid by the Medicare program. The intent was to slow the growth of Medicare costs, but the result was a formula that has proposed cutting payments for America’s doctors year after year after year. These are cuts that would not only jeopardize our physicians’ pay, but our seniors’ health care.

Since 2003, Congress has acted to prevent these pay cuts from going into effect. These votes were largely bipartisan, and they succeeded when Democrats ran Congress and when Republicans ran Congress – which was most of the time.

This year, a majority of Congress is willing to prevent a pay cut of 21% – a pay cut that would undoubtedly force some doctors to stop seeing Medicare patients altogether. But this time, some Senate Republicans may even block a vote on this issue. After years of voting to defer these cuts, the other party is now willing to walk away from the needs of our doctors and our seniors.

Now, I realize that simply kicking these cuts down the road another year is not a long-term solution to this problem. For years, I have said that a system where doctors are left to wonder if they’ll get fairly reimbursed makes absolutely no sense. And I am committed to permanently reforming this Medicare formula in a way that balances fiscal responsibility with the responsibility we have to doctors and seniors. In addition, we’re already taking significant steps to slow the growth of Medicare costs through health insurance reform – not by targeting doctors and seniors, but by eliminating 50% of the waste, fraud, and abuse in the system by 2012. This not only strengthens Medicare, it saves taxpayer dollars.

I’m absolutely willing to take the difficult steps necessary to lower the cost of Medicare and put our budget on a more fiscally sustainable path. But I’m not willing to do that by punishing hard-working physicians or the millions of Americans who count on Medicare. That’s just wrong. And that’s why in the short-term, Congress must act to prevent this pay cut to doctors.

If they don’t act, doctors will see a 21% cut in their Medicare payments this week. This week, doctors will start receiving these lower reimbursements from the Medicare program. That could lead them to stop participating in the Medicare program. And that could lead seniors to lose their doctors.

We cannot allow this to happen. We have to fix this problem so that our doctors can get paid for the life-saving services they provide and keep their doors open. We have to fix this problem to keep the promise of Medicare for our seniors so that they get the health care they deserve. So I urge Republicans in the Senate to at least allow a majority of Senators and Congressmen to stop this pay cut. I urge them to stand with America’s seniors and America’s doctors.

Thanks.

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• Source(s): The White House
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10
Jun
10

Actor Kevin Costner presents “a partial solution” to Gulf oil spill

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Actor Kevin Costner presents “a partial solution” to Gulf oil spill

Thursday, June 10, 2010

••• Hollywood star Kevin Costner has urged Congress to consider a technology he invested more than $20 million in that could be used to separate oil from water in the disastrous Gulf of Mexico spill.

‘I know there must be question why I am here, I want to assure every one in the room that it’s not because I heard a voice in the cornfield,’ Costner joked, referring to his role in the film The Field of Dreams, in which he played a farmer who heard voices telling him to build a ballpark in his corn field.

Costner, star of the post-apocalyptic classic Waterworld, said he was deeply affected by the 1989 Exxon Valdez oil spill and that convinced him to use personal resources to develop technologies to help people and the environment.

‘Today that technology (CINC) is the most effective and efficient tool for cleaning up oil spills that you have probably never heard of,’ he explained.
‘I envisioned the machine as a safety device, compact and portable enough that it could be deployed on a small craft and rugged enough to operate reliably in rough seas.’

Costner said oil giant BP, struggling with the worst ever U.S. oil spill, was interested in the technology.

‘Our machine is the right machine for the moment,’ said Costner. After successful tests, ‘BP is now moving to place initial orders (of) these machines and they acknowledged they do the job.’
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09
Jun
10

Senate hearing disrupted as woman pours liquid on self

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Senate hearing disrupted as woman pours liquid on self

Wednesday, June 9, 2010

••• A Senate hearing on the Gulf of Mexico oil spill was disrupted on Wednesday as a protester poured an oily-looking liquid on herself before being arrested.

‘This is what it feels like to have oil dumped on you,’ the woman, identified as Diane Wilson, said in comments addressed to Senator Lisa Murkowski of Alaska.

Wilson issued a statement issued later saying she is a fourth generation shrimper from the Gulf and that her protest was directed against Murkowski for supporting the oil industry and opposing measures such as lifting the liability cap on oil firms in offshore spills.

Wilson opened a jar and poured a dark, oily-looking substance on her head at the hearing of the Senate Energy and Natural Resources Committee, before being taken away by Capitol police. Committee staff said later the jar contained syrup.

‘With this BP disaster, I am seeing the destruction of my community and I am outraged,’ Wilson said in her statement.

‘I am also seeing elected representatives like Senator Lisa Murkowski blocking BP from being legally responsible to pay for this catastrophe.’

At the hearing, U.S. Interior Secretary Ken Salazar told lawmakers offshore drilling in the Gulf of Mexico will continue ‘in a safe way’ in the wake of the massive Deepwater Horizon accident.

Salazar told the committee that a range of new regulations implemented following the accident at the BP-operated well would protect against new spills.

‘Offshore drilling will continue… it has to be done in a safe way,’ he told the panel.

Salazar, who heads the agency that oversees oil leasing and management of federal lands, highlighted tougher safety rules imposed this week for offshore drilling and the reorganisation of the Minerals Management Service, the division which has been criticised for being too cozy with the oil industry.

But he said the rules would not halt all offshore drilling despite the six-month moratorium on new deepwater wells ordered by President Barack Obama last month.

‘The importance of the jobs is very much on the mind of the president and on my mind as well,’ Salazar said.

He told Senator Mary Landrieu of Louisiana that the administration would ask BP to pay salaries of oil sector workers whose jobs have been suspended by the drilling ban.

According to committee figures, the Gulf of Mexico has some 3,600 wells or drilling operations and 700 of them are at depths of around 1 mile like the Deepwater Horizon.

Salazar confirmed that BP was capturing around 15,000 barrels a day from a new device placed on the wellhead, but was unable to estimate how much was still leaking.

‘It is important for us to have the right number. We’ll get that right number,’ he said.

‘Our goal is get zero pollution from this well. Nothing is being spared to bring this problem under control.’
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22
May
10

Facebook preparing to make changes to privacy settings in response to criticism

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Facebook preparing to make changes to privacy settings in response to criticism

Saturday, May 22, 2010

Facebook on Saturday said it plans to simplify privacy controls at the popular social-networking service to appease critics.

‘We’ve spent the last couple of weeks listening to users and consulting with experts in California; Washington, DC, and around the world,’ Facebook spokesman Andrew Noyes said in response to an AFP inquiry.

‘The messages we’ve received are pretty clear. Users appreciate having precise and comprehensive controls, but want them to be simpler and easier to use.’

Facebook contended that members like new programs rolled out at the California-based internet hotspot but want easy ways to opt out of sharing personal information with third-party applications or websites.

‘We’re listening to this input and incorporating it into innovations we hope to announce shortly,’ Noyes said.

Facebook has been under fire from U.S. privacy and consumer groups, U.S. lawmakers and the European Union over new features that critics claim compromise the privacy of its more than 400 million members.

The features introduced last month include the ability for partner websites to incorporate Facebook data, a move that would further expand the social network’s presence on the internet.
Four U.S. senators, in a letter to Facebook co-founder Mark Zuckerberg, said they were worried that personal information about Facebook users is being made available to third party websites.

The senators also expressed concerns that ‘Facebook now obligates users to make publicly available certain parts of their profile that were previously private’.

Sharing personal information should be an ‘opt-in’ procedure in which a user specifically gives permission for data to be shared, privacy advocates argue.

Coming Facebook refinements are not expected to include a shift to an opt-in model.

Facebook vice president of global communications Elliot Schrage has been adamant that online privacy is taken very seriously at the company.

‘These new products and features are designed to enhance personalisation and promote social activity across the internet while continuing to give users unprecedented control over what information they share, when they want to share it, and with whom,’ Schrage said.

MySpace on May 17 announced plans to simplify its privacy settings as it seeks to differentiate itself from social network rival Facebook, which has eclipsed the News Corp-owned social networking service.

‘The last few weeks have been fraught with discussion around user privacy on social networks,’ MySpace co-president Mike Jones said in a blog post without directly mentioning Facebook by name.

‘While MySpace at its core is about discovery, self expression and sharing, we understand people might want the option of limiting the sharing of their information to a select group of friends,’ Jones said.
Jones said MySpace, which was bought by News Corp. in 2005 for $580 million, is ‘planning the launch of a simplified privacy setting for our user profiles.

‘While we’ve had these plans in the works for some time, given the recent outcry over privacy concerns in the media, we felt it was important to unveil those plans to our users now,’ he said.
• Source(s): Facebook Inc. and MySpace / Digital Media Group / News Corporation
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15
May
10

Weekly Address: Wall Street Reform & Main Street

NEWS
Weekly Address: Wall Street Reform & Main Street

President Obama “Wall Street Reform Will Bring Greater Security to Folks on Main Street”

Saturday, May 15, 2010

In his weekly address, President Barack Obama discussed how reforming Wall Street will strengthen Main Street. The reform bill moving through Congress will empower and protect American families with the strongest consumer financial protections in history, level the playing field for community banks by making sure all lenders are subject to tough oversight, and strengthen small businesses by curbing excessive risk taking on Wall Street, which will help protect credit for our small businesses. As the economy recovers in the short term, we need to build a new foundation for growth and prosperity for the long term. This bill helps to do just that.

On Thursday, I paid a visit to a small business in Buffalo, New York, a town that’s been hard hit in recent decades. I heard from folks about the struggles they’ve been facing for longer than they care to remember. And I talked with them about what my administration is doing to help our families, our small businesses, and our economy rebound from this recession.

Jumpstarting job creation in the private sector and fostering a climate that encourages businesses to hire again is vitally important – and I’ll continue working hard to make sure that happens. But my responsibility as President isn’t just to help our economy rebound from this recession – it’s to make sure an economic crisis like the one that helped trigger this recession never happens again.

That’s what Wall Street reform will help us do. In recent weeks, there’s been a lot of back and forth about the reform bill currently making its way through Congress. There’s been a lot of discussion about technical aspects of the bill, and a lot of heated – and frankly, sometimes misleading – rhetoric coming from opponents of reform.

All of this has helped obscure what reform would actually mean for you, the American people. So, I just wanted to take a few minutes to talk about why every American has a stake in Wall Street reform.

First and foremost, you have a stake in it if you’ve ever been treated unfairly by a credit card company, misled by pages and pages of fine print, or ended up paying fees and penalties you’d never heard of before. And you have a stake in it if you’ve ever tried to take out a home loan, a car loan, or a student loan, and been targeted by the predatory practices of unscrupulous lenders.

The Wall Street reform bill in Congress represents the strongest consumer financial protections in history. You’ll be empowered with the clear and concise information you need to make the choices that are best for you. We’ll help stop predatory practices, and curb unscrupulous lenders, helping secure your family’s financial future.

That’s why families have a stake in it. And our community banks also have a stake in reform. These are banks we count on to provide the capital that lets our small businesses hire and grow.

The way the system is currently set up, these banks are at a disadvantage because while they are often playing by the rules, many of their less scrupulous competitors are not. So, what reform will do is help level the playing field by making sure all our lenders – not just community banks – are subject to tough oversight. That’s good news for our community banks, which is why we’ve received letters from some of these banks in support of reform.

What’s true for our community banks is also true for small businessmen and women like the ones I met in Buffalo. These small businesses were some of the worst victims of the excessive risk-taking on Wall Street that led to this crisis. Their credit dried up. They had to let people go. Some even shut their doors altogether. And unless we put in place real safeguards, we could see it happen all over again.

That’s why Wall Street reform is so important. With reform, we’ll make our financial system more transparent by bringing the kinds of complex, backroom deals that helped trigger this crisis into the light of day. We’ll prevent banks from taking on so much risk that they could collapse and threaten our whole economy. And we’ll give shareholders more of a say on pay to help change the perverse incentives that encouraged reckless risk-taking in the first place. Put simply, Wall Street reform will bring greater security to folks on Main Street.

The stories I heard in Buffalo this week were a reminder that, despite the progress we’ve made, we need to keep working hard, so we can build on that progress and rebound from this recession in the short-term. But even as we do, we also need to lay a new foundation for growth and shared prosperity over the long-term.

Next week, we have a chance to help lay a cornerstone in that foundation. The reform bill being debated in the Senate will not solve every problem in our financial system – no bill could. But what this strong bill will do is important, and I urge the Senate to pass it as soon as possible, so we can secure America’s economic future in the 21st century.

• Source(s): The White House
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10
May
10

Fannie Mae asks for $8.4 billion in aid

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Fannie Mae asks for $8.4 billion in aid

Monday, May 10, 2010

••• U.S. mortgage finance company Fannie Mae has again asked taxpayers for more money after reporting a first-quarter loss of more than $13 billion.

The company, which was rescued by Washington in September 2008, said it needs an additional $8.4 billion from the government to help cover mounting losses.

Fannie Mae says it lost $13.1 billion, or $2.29 per share, in the January-March period. That takes into account $1.5 billion in dividends paid to the Treasury Department. It compares with a loss of $23.2 billion, or $4.09 a share, a year ago.

The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae’s total to $83.6 billion. The total bill for the duo will now be nearly $145 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.

Fannie and Freddie play a vital role in the U.S. mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That’s about half of all mortgages.

The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences.

With the housing market still on shaky ground, Obama administration officials say it is still too early to draft any proposals to reform the two companies or the broader housing finance system.

But Republicans argue the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. They propose transforming Fannie and Freddie into private companies with no government subsidies, or shutting them down completely.

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05
May
10

Freddie Mac seeks $10.6 billion in aid after 1Q loss

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Freddie Mac seeks $10.6 billion in aid after 1Q loss

Wednesday, May 5, 2010

••• Freddie Mac is asking for $10.6 billion in additional U.S. federal aid after posting a big loss in the first three months of the year.

The McLean, Virginia-based mortgage finance company has been effectively owned by the government after nearly collapsing in September 2008. The new request will bring the total tab for rescuing Freddie Mac to $61.3 billion.

But the company’s CEO Charles Haldeman said, ‘We are seeing some signs of stabilisation in the housing market, including house prices and sales in some key geographic areas’.

Freddie Mac set aside $5.4 billion to cover credit losses from bad mortgages, down from $7 billion in the final three months of last year.

Haldeman cautioned, however, that the housing market ‘remains fragile with historically high delinquency and foreclosure levels’ and high unemployment.

Created by Congress, Freddie Mac and sibling company Fannie Mae buy mortgages from lenders and package them into bonds that are resold to global investors. As the housing bubble burst, they were unable to raise enough money to stay afloat, and the government effectively nationalised them.

Since then, Uncle Sam’s share of the mortgage business has kept getting bigger. Government institutions – mainly Fannie Mae, Freddie Mac, the Federal Housing Administration and the Veterans Administration – backed nearly 97 percent of home loans in the first quarter of 2010, according to trade publication Inside Mortgage Finance.

Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie. Freddie’s new request will bring the total taxpayer tab for both companies to about $136.5 billion.

Fannie Mae is expected to release earnings soon and may also request additional financial aid.

With the housing market still on shaky ground, Obama administration officials argue that it is still too early to draft any proposals to reform the two companies or the broader housing finance system.

But Republicans argue that the sweeping financial overhaul currently before Congress is incomplete without a plan for Fannie and Freddie. Senate Republicans propose transforming Fannie and Freddie into private companies with no government subsidies, or to shut them down completely.

‘The events of the past two years have made it clear that never again can we allow the taxpayer to be responsible for poorly managed financial entities who gambled away billions of dollars,’ Senator John McCain said in a statement. ‘The time has come to end Fannie Mae and Freddie Mac’s taxpayer-backed slush fund and require them to operate on a level playing field.’

But Barry Zigas, director of housing policy at the Consumer Federation of America and a former Fannie Mae executive, said Obama officials are right to take their time.

‘They are providing most of the mortgage credit that’s making it possible for Americans to buy homes and refinance their mortgages,’ Zigas said. ‘They’re vital to the housing recovery that everyone is hoping is getting started.’

But the hangover from bad loans made in during the boom years still hurts.

Freddie Mac said on Wednesday it lost $8 billion, or $2.45 a share, in the January-March period. That takes into account $1.3 billion in dividends paid to the Treasury Department. It compares with a loss of $10.4 billion, or $3.18 a share, in the first quarter last year.

The company, however, cautioned that new accounting standards make it difficult to compare the most recent quarter with the year-ago period. In the first quarter of this year, Freddie Mac was forced to bring $1.5 trillion in assets and liabilities onto its balance sheet, causing the company’s net worth to plunge by $11.7 billion.

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01
May
10

Weekly Address: Giving Government Back to the American People

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Weekly Address: Giving Government Back to the American People

President Obama Calls on Congress to Enact Reforms to Stop a ‘Potential Corporate Takeover of Our Elections’

Saturday, May 1, 2010

In the wake of a recent Supreme Court ruling, which gives special interests, corporations – and potentially foreign nationals – the power to spend unlimited money to influence the outcome of elections, President Barack Obama called on Congress to enact reforms to limit this power and protect the integrity of our democracy. With these reforms, campaign committees will have to reveal who is funding them, and their leaders or financers will have to claim responsibility for their ads. Also, the reforms will restrict foreign corporations and foreign nationals from spending money in American elections. These reforms will help ensure the government works for the American people, not the special interests.

Over the past few weeks, as we’ve debated reforms to hold Wall Street accountable and protect consumers and small businesses in our financial system, we’ve come face-to-face with the great power of special interests in the workings of our democracy. Of course, this isn’t a surprise. Every time a major issue arises, we’ve come to expect that an army of lobbyists will descend on Capitol Hill in the hopes of tilting the laws in their favor.

That’s one of the reasons I ran for President: because I believe so strongly that the voices of ordinary Americans were being drowned out by the clamor of a privileged few in Washington. And that’s why, since the day I took office, my administration has been taking steps to reform the system. Recently, however, the Supreme Court issued a decision that overturned decades of law and precedent – dealing a huge blow to our efforts to rein in this undue influence. In short, this decision gives corporations and other special interests the power to spend unlimited amounts of money – literally millions of dollars – to affect elections throughout our country. This, in turn, will multiply their influence over decision-making in our government.

In the starkest terms, members will know – when pressured by lobbyists – that if they dare to oppose that lobbyist’s client, they could face an onslaught of negative advertisements in the run up to their next election. And corporations will be allowed to run these ads without ever having to tell voters exactly who is paying for them. At a time when the American people are already being overpowered in Washington by these forces, this will be a new and even more powerful weapon that the special interests will wield.

In fact, it’s exactly this kind of vast power that led a great Republican President – Teddy Roosevelt – to tackle this issue a century ago. He warned of the dangers of limitless corporate spending in our political system. He actually called it “one of the principal sources of corruption in our political affairs.” And he proposed strict limits on corporate influence in elections. “Every special interest is entitled to justice,” he said. “but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office.”

In the wake of the recent Supreme Court ruling, we face a similar challenge. That’s why it’s so important that Congress consider new reforms to prevent corporations and other special interests from gaining even more clout in Washington. And almost all of these reforms are designed to bring new transparency to campaign spending. They are based on the principle espoused by former Supreme Court Justice Louis Brandeis – that sunlight is the best disinfectant.

Shadowy campaign committees would have to reveal who’s funding their activities to the American people. And when corporations and other special interests take to the airwaves, whoever is running and funding the ad would have to appear in the advertisement and claim responsibility for it – like a company’s CEO or an organization’s biggest contributor. This will mean citizens can evaluate the claims in these ads with information about an organization’s real motives.

We know how important this is. We’ve all seen groups with benign-seeming names sponsoring television commercials that make accusations and assertions designed to influence the public debate and sway voters’ minds. Now, of course every organization has every right in this country to make their voices heard. But the American people also have the right to know when some group like “Citizens for a Better Future” is actually funded entirely by “Corporations for Weaker Oversight.”

In addition, these reforms would address another troubling aspect of the Supreme Court’s ruling. Under the bill Congress will consider, we’ll make sure that foreign corporations and foreign nationals are restricted from spending money to influence American elections, just as they were in the past – even through U.S. subsidiaries. And we’d keep large contractors that receive taxpayer funds from interfering in our elections as well, to avoid the appearance of corruption and the possible misuse of tax dollars.

Now, we can expect that these proposed changes will be met with heavy resistance from the special interests and their supporters in Congress. But I’m calling on leaders in both parties to resist these pressures. For what we are facing is no less than a potential corporate takeover of our elections. And what is at stake is no less than the integrity of our democracy. This shouldn’t be a Democratic issue or a Republican issue. This is an issue that goes to whether or not we will have a government that works for ordinary Americans – a government of, by, and for the people. That’s why these reforms are so important. And that’s why I’m going to fight to see them passed into law.

Thanks so much.

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29
Apr
10

Protesters enter NYC bank buildings before rally

NEWS
Protesters enter NYC bank buildings before rally

Thursday, April 29, 2010

Noisy protesters with signs took over three bank building lobbies on Thursday in a prelude to a Wall Street rally by workers and union leaders angry over lost jobs, the taxpayer-funded bailout of financial institutions and questionable lending practices by big banks.

Hours before the scheduled rally, more than 100 people entered a midtown Manhattan building housing JPMorgan Chase offices. They handed a bank executive a letter requesting a meeting with the CEO, and chanted ‘Bust up big banks!’ and ‘People power!’
A half-hour later, they were calmly escorted outside by officers, who remained expressionless as the protesters chanted, ‘The police need a raise.’

They then walked a few blocks down Park Avenue and crowded into a Wells Fargo and Wachovia building lobby. Police arrived on horseback as curious office workers watched the scene unfold from their windows.
‘We’re here today to stop the corporate greed that is ruining our neighbourhoods,’ said Andrea Goldman, 59, who’s part of a group called Alliance to Develop Power.

Sign slogans included: ‘Save Our Jobs’ and ‘Save Our Homes’.

The banks did not immediately respond to requests for comment.

Thousands of workers and union members were expected at the rally, organised by the AFL-CIO, the largest federation of North American labour unions, and an association of community groups.

The Securities Industry and Financial Markets Association, which includes many Wall Street financial institutions, declined to comment.

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28
Apr
10

Goldman’s defense? We’re misunderstood

NEWS
Goldman’s defense? We’re misunderstood

Wednesday, April 28, 2010

Goldman Sachs on Tuesday denied reaping vast profits from the collapse of the U.S. housing market as its top executive and a star trader faced hostile questions in Congress over the 2008 financial meltdown.

In angry exchanges before a Senate investigative committee, the storied Wall Street firm was accused of fuelling a crisis that forced thousands of Americans from their homes and continues to ravage the U.S. economy.

Top Goldman Sachs officials have defended their conduct in the financial crisis, flatly disputing the government’s fraud allegations against the giant financial house. I did not mislead investors, insisted a trading executive at the heart of the government’s case.

But they ran into a wall of bipartisan wrath before a Senate panel investigating Goldman’s role in the financial crisis and the Securities and Exchange Commission fraud suit against it and one of its traders. Sen. Carl Levin (D-Mich.) accused Goldman on Tuesday of making risky financial bets.

About a half dozen protesters were in the committee room, dressed in prison stripes with names on signs around their necks of Fabrice Tourre, the only company official directly accused in the SEC suit, and Goldman CEO Lloyd Blankfein, who was also scheduled to testify.

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27
Apr
10

Goldman Sachs: Lloyd Blankfein Says Firm Doesn’t Need to Disclose Position

NEWS
Goldman Sachs: Lloyd Blankfein Says Firm Doesn’t Need to Disclose Position

Tuesday, April 27, 2010

Goldman Sachs on Tuesday denied reaping vast profits from the collapse of the U.S. housing market as its top executive and a star trader faced hostile questions in Congress over the 2008 financial meltdown.

In angry exchanges before a Senate investigative committee, the storied Wall Street firm was accused of fuelling a crisis that forced thousands of Americans from their homes and continues to ravage the U.S. economy.

Democratic Senator Carl Levin, the panel’s chairman, assailed Goldman as representative of Wall Street’s ‘unbridled greed,’ drawing them into a raging political battle over financial reform.

The Senate was expected to vote later on Tuesday on whether to proceed with debate about the most sweeping financial reforms in a generation, a day after Republicans successfully blocked a similar move.

Against this caustic backdrop executives battled to salvage the firm’s reputation, rejecting charges – recently filed by a U.S. watchdog – that Goldman sold clients a complex financial product devised by some who bet against it.

Levin demanded to know why Goldman had been ‘trying to sell a shitty deal’ to investors, fuming that ‘as we speak, lobbyists fill the halls of Congress hoping to weaken or kill reforms that would end these abuses.’
French trader Fabrice Fabulous Fab Tourre, who is at the centre of the Securities and Exchange Commission’s case against the firm, was among the first to be dragged before the committee.

He denied any wrongdoing: ‘I deny – categorically – the SEC’s allegation. And I will defend myself in court against this false claim,’ said Tourre.

‘I have been the target of unfounded attacks on my character and motives.’

If Goldman executives hoped to get an easier ride from Republicans, they may have been disappointed. Former Republican presidential candidate John McCain was scathing.

‘I don’t know if Goldman Sachs has done anything illegal,’ he said, adding that ‘from the reading of these emails and the information that this committee has uncovered there is no doubt their behaviour was unethical and the American people will render a judgment as well as the courts.’

Goldman chief executive Lloyd Blankfein was due to appear later in the day, but in prepared testimony said there was nothing wrong with Goldman hedging its bets by holding ”short” positions that would benefit the firm if housing prices collapsed.

‘(We) didn’t have a massive short (position) against the housing market and we certainly did not bet against our clients,’ he said.

‘If our clients believe that we don’t deserve their trust, we cannot survive,’ he said. ‘We believe that we managed our risk as our shareholders and our regulators would expect.’

Blankfein also said that, ‘while profitable overall,’ Goldman lost about $1.2 billion from investments tied to the residential housing market.
In the hearing, Levin pointed to Goldman email messages he said refuted the firm’s claims.

In one November 2007 message from Blankfein, he says: ‘Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts,’ which are essentially bets that the market will drop.

Goldman Sachs on Tuesday denied reaping vast profits from the collapse of the U.S. housing market as its top executive and a star trader faced hostile questions in Congress over the 2008 financial meltdown.

In angry exchanges before a Senate investigative committee, the storied Wall Street firm was accused of fuelling a crisis that forced thousands of Americans from their homes and continues to ravage the U.S. economy.

Democratic Senator Carl Levin, the panel’s chairman, assailed Goldman as representative of Wall Street’s ‘unbridled greed,’ drawing them into a raging political battle over financial reform.

The Senate was expected to vote later on Tuesday on whether to proceed with debate about the most sweeping financial reforms in a generation, a day after Republicans successfully blocked a similar move.

Against this caustic backdrop executives battled to salvage the firm’s reputation, rejecting charges – recently filed by a U.S. watchdog – that Goldman sold clients a complex financial product devised by some who bet against it.

Levin demanded to know why Goldman had been ‘trying to sell a shitty deal’ to investors, fuming that ‘as we speak, lobbyists fill the halls of Congress hoping to weaken or kill reforms that would end these abuses.’

French trader Fabrice Fabulous Fab Tourre, who is at the centre of the Securities and Exchange Commission’s case against the firm, was among the first to be dragged before the committee.
He denied any wrongdoing: ‘I deny – categorically – the SEC’s allegation. And I will defend myself in court against this false claim,’ said Tourre.

‘I have been the target of unfounded attacks on my character and motives.’

If Goldman executives hoped to get an easier ride from Republicans, they may have been disappointed. Former Republican presidential candidate John McCain was scathing.

‘I don’t know if Goldman Sachs has done anything illegal,’ he said, adding that ‘from the reading of these emails and the information that this committee has uncovered there is no doubt their behaviour was unethical and the American people will render a judgment as well as the courts.’

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26
Apr
10

Republicans block debate of finance rules reform

NEWS
Republicans block debate of finance rules reform

Monday, April 26, 2010

U.S. lawmakers on Monday failed to pass a test vote of the widely watched financial regulatory reform bill in a sharply divided Senate.

The lawmakers voted 57 – 41, falling short of the 60 votes that Democrats needed to proceed on the regulatory overhaul in the Senate. All 41 Republican senators said that they oppose the bill.

Two Democrats voted against the bill and two Republicans did not vote.

The legislation, which has become President Barack Obama’s top domestic priority after the completion of the healthcare reform, aims to reset the rules of the U.S. financial sector.

The bill, proposed by Senate Banking Committee Chair Chris Dodd (D-Conn.), would map a way to dissolve the so-called “too big to fail” firms in a bid to avoid massive taxpayer-funded “bailouts” introduced in late 2008 amid the financial crisis.

It will also tighten regulations on the giant market in derivatives – complex, privately traded instruments tied to the underlying value of a commodity and seen as vehicles for dangerous speculation.

There has been a consensus that the country must tighten regulations on Wall Street after the collapse of Lehman Brothers in September 2008, which triggered the fresh round of global financial crisis and a deep recession.

But wide disagreements exist between the two parties.

Republicans say the Dodd bill will add new burden to the U.S. taxpayers and may not prevent future crisis.

President Obama said earlier this month that he urged the bill to pass the Senate in weeks. But analysts say that given the escalating political pressure, it will take longer time for the sweeping financial overhaul to complete.

Obama said on Monday he was “deeply disappointed” that Senate Republicans had blocked the test vote.

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26
Apr
10

Goldman Sachs and “War Profiteering”

NEWS
Goldman Sachs and “War Profiteering”

Monday, April 26, 2010

Embattled Wall Street investment giant Goldman Sachs has hit back at claims it used the U.S. sub-prime mortgage crisis to make tens of millions of dollars in profit.

The financial giant, already facing fraud charges, found itself in the middle of a new firestorm on Saturday after emails released by a U.S. Senate panel suggested Goldman executives made huge profits out of the 2007 crisis.

Goldman fired back on Sunday, accusing the Senate Permanent Subcommittee on Investigations of having ‘cherry-picked just four emails from the 20 million pages of documents and emails provided to it’.

‘It is concerning that the subcommittee seems to have reached its conclusion even before holding a hearing,’ added Goldman Sachs spokesman Lucas van Praag.

The emails come at a bad time for Goldmans Sachs.

Earlier this month, the U.S. Securities and Exchange Commission announced it was charging the company with fraud, accusing it of ‘defrauding investors by misstating and omitting key facts’ about a product based on subprime, or higher-risk mortgage-backed securities.

On Saturday, subcommittee chairman Democratic Senator Carl Levin said Goldman Sachs and other investment banks had acted as ‘self-interested promoters of risky and complicated financial schemes that helped trigger the crisis’.

He said the bank had bundled toxic mortgages into complex financial instruments, got credit rating agencies to label them as AAA securities, and then sold them to investors, magnifying and spreading risk throughout the financial system.

In addition, Levin said, the bank often bet against the instruments it sold and rolled in profits as a result.

Van Praag said on Sunday the company had net losses of over $1.2 billion in residential mortgage-related products in 2007 and 2008.

‘This demonstrates conclusively that we did not make a significant amount of money in the mortgage market,’ he said.

But the four emails released by the subcommittee suggest that the company was able to make massive profits by shorting products including residential mortgage-backed securities and collateralised debt obligations (CDOs).

In one email, Goldman Sachs chairman and chief executive officer Lloyd Blankfein appeared to gloat about the strategy in an exchange with other top Goldman executives.

‘Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts,’ the message said.

In another, a Goldman Sachs manager noted that the firm had bet against 32 billion dollars in mortgage-related securities that had been downgraded by credit rating agencies, causing losses for many investors.

‘Sounds like we will make some serious money,’ the manager wrote.

‘Yes, we are well positioned,’ his colleague responded.

In a third email, Goldman employees discussed securities that were underwritten and sold by the company and tied to mortgages issued by Washington Mutual Bank’s subprime lender, Long Beach Mortgage.

One employee reported the ‘wipeout’ of one Long Beach security and the ‘imminent’ collapse of another as ‘bad news’ that would cost the firm $2.5 million.

The ‘good news,’ the employee wrote, was that Goldman had bet against the very securities it had assembled and sold, meaning the failure would net the company five million dollars.

Blankfein and other current and former company personnel are scheduled to testify before the subcommittee on Tuesday.

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24
Apr
10

Goldman Sachs e-mails show bank sought to profit from housing downturn

NEWS
Goldman Sachs e-mails show bank sought to profit from housing downturn

Saturday, April 24, 2010

In late 2007 as the mortgage crisis gained momentum and many banks were suffering losses, Goldman Sachs executives traded e-mail messages saying that they would make “some serious money” betting against the housing markets.

The e-mails, released Saturday morning by the Senate Permanent Subcommittee on Investigations, appear to contradict some of Goldman’s previous statements that left the impression that the firm lost money on mortgage-related investments.

In the e-mails, Lloyd C. Blankfein, the bank’s chief executive, acknowledged in November of 2007 that the firm indeed had lost money initially. But it later recovered from those losses by making negative bets, known as short positions, enabling it to profit as housing prices fell and homeowners defaulted on their mortgages. “Of course we didn’t dodge the mortgage mess,” he wrote. “We lost money, then made more than we lost because of shorts.”

In another message, dated July 25, 2007, David A. Viniar, Goldman’s chief financial officer, remarked on figures that showed the company had made a $51 million profit in a single day from bets that the value of mortgage-related securities would drop. “Tells you what might be happening to people who don’t have the big short,” he wrote to Gary D. Cohn, now Goldman’s president.

The messages were released Saturday ahead of a Congressional hearing on Tuesday in which seven current and former Goldman employees, including Mr. Blankfein, are expected to testify. The hearing follows a recent securities fraud complaint that the Securities and Exchange Commission filed against Goldman and one of its employees, Fabrice Tourre, who will also testify on Tuesday.

Actions taken by Wall Street firms during the housing meltdown have become a major factor in the contentious debate over financial reform. The first test of the administration’s overhaul effort will come Monday when the Senate majority leader, Harry Reid, is to call a procedural vote to try to stop a Republican filibuster.

Republicans have contended that the renewed focus on Goldman stems from Democrats’ desire to use anger at Wall Street to push through a financial reform bill.

Carl Levin, Democrat of Michigan and head of the Permanent Subcommittee on Investigations, said that the e-mail messages contrast with Goldman’s public statements about its trading results. “The 2009 Goldman Sachs annual report stated that the firm ‘did not generate enormous net revenues by betting against residential related products,’?” Mr. Levin said in a statement Saturday when his office released the documents. “These e-mails show that, in fact, Goldman made a lot of money by betting against the mortgage market.”

A Goldman spokesman did not immediately respond to a request for comment.

The Goldman messages connect some of the dots at a crucial moment of Goldman history. They show that in 2007, as most other banks hemorrhaged losses from plummeting mortgage holdings, Goldman prospered.

At first, Goldman openly discussed its prescience in calling the housing downfall. In the third quarter of 2007, the investment bank reported publicly that it had made big profits on its negative bet on mortgages.

But by the end of that year, the firm curtailed disclosures about its mortgage trading results. Its chief financial officer told analysts at the end of 2007 that they should not expect Goldman to reveal whether it was long or short on the housing market. By late 2008, Goldman was emphasizing its losses, rather than its profits, pointing regularly to write-downs of $1.7 billion on mortgage assets and leaving out the amount it made on its negative bets.

Goldman and other firms often take positions on both sides of an investment. Some are long, which are bets that the investment will do well, and some are shorts, which are bets the investment will do poorly. If an investor’s positions are balanced – or hedged, in industry parlance – then the combination of the longs and shorts comes out to zero.

Goldman has said that it added shorts to balance its mortgage book, not to make a directional bet that the market would collapse. But the messages released Saturday appear to show that in 2007, at least, Goldman’s short bets were eclipsing the losses on its long positions. In May 2007, for instance, Goldman workers e-mailed one another about losses on a bundle of mortgages issued by Long Beach Mortgage Securities. Though the firm lost money on those, a worker wrote, there was “good news”: “we own 10 mm in protection.” That meant Goldman had enough of a bet against the bond that, over all, it profited by $5 million.

Documents released by the Senate committee appear to indicate that in July 2007, Goldman’s daily accounting showed losses of $322 million on positive mortgage positions, but its negative bet – what Mr. Viniar called “the big short” – came in $51 million higher.

As recently as a week ago, a Goldman spokesman emphasized that the firm had tried only to hedge its mortgage holdings in 2007 and said the firm had not been net short in that market.

The firm said in its annual report this month that it did not know back then where housing was headed, a sentiment expressed by Mr. Blankfein the last time he appeared before.

“We did not know at any minute what would happen next, even though there was a lot of writing,” he told the Financial Crisis Inquiry Commission in January.

It is not known how much money in total Goldman made on its negative housing bets. Only a handful of e-mail messages were released Saturday, and they do not reflect the complete record.

The Senate subcommittee began its investigation in November 2008, but its work attracted little attention until a series of hearings in the last month. The first focused on lending practices at Washington Mutual, which collapsed in 2008, the largest bank failure in American history; another scrutinized deficiencies at several regulatory agencies, including the Office of Thrift Supervision and the Federal Deposit Insurance Corporation.

A third hearing, on Friday, centered on the role that the credit rating agencies – Moody’s, Standard & Poor’s and Fitch – played in the financial crisis. At the end of the hearing, Mr. Levin offered a preview of the Goldman hearing scheduled for Tuesday.

“Our investigation has found that investment banks such as Goldman Sachs were not market makers helping clients,” Mr. Levin said, referring to testimony given by Mr. Blankfein in January. “They were self-interested promoters of risky and complicated financial schemes that were a major part of the 2008 crisis. They bundled toxic and dubious mortgages into complex financial instruments, got the credit-rating agencies to label them as AAA safe securities, sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the financial instruments that they sold, and profiting at the expense of their clients.”

The transaction at the center of the S.E.C.’s case against Goldman also came up at the hearings on Friday, when Mr. Levin discussed it with Eric Kolchinsky, a former managing director at Moody’s. The mortgage-related security was known as Abacus 2007-AC1, and while it was created by Goldman, the S.E.C. contends that the firm misled investors by not disclosing that it had allowed a hedge fund manager, John A. Paulson, to select mortgage bonds for the portfolio that would be most likely to fail. That charge is at the core of the civil suit it filed against Goldman.

Moody’s was hired by Goldman to rate the Abacus security. Mr. Levin asked Mr. Kolchinsky, who for most of 2007 oversaw the ratings of collateralized debt obligations backed by subprime mortgages, if he had known of Mr. Paulson’s involvement in the Abacus deal.

“I did not know, and I suspect – I’m fairly sure that my staff did not know either,” Mr. Kolchinsky said.

Mr. Levin asked whether details of Mr. Paulson’s involvement were “facts that you or your staff would have wanted to know before rating Abacus.” Mr. Kolchinsky replied: “Yes, that’s something that I would have personally wanted to know.”

Mr. Kolchinsky added: “It just changes the whole dynamic of the structure, where the person who’s putting it together, choosing it, wants it to blow up.”

The Senate announced that it would convene a hearing on Goldman Sachs within a week of the S.E.C.’s fraud suit. Some members of Congress questioned whether the two investigations had been coordinated or linked.

Mr. Levin’s staff said there was no connection between the two investigations. They pointed out that the subcommittee requested the appearance of the Goldman executives and employees well before the S.E.C. filed its case.

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23
Apr
10

Harry Reid moves forward with first financial reform vote

NEWS
Harry Reid moves forward with first financial reform vote

Friday, April 23, 2010

Senate Majority Leader Harry Reid says he’ll try to move a financial reform bill to the floor today–and if the Republicans object, as they’ve threatened to do, he’ll force them to take a tough vote on whether to allow debate on legislation to regulate Wall Street.

“If they let us move to it, I’d be happy to do that,” Reid said at a press conference with Democratic leadership this afternoon. “If they don’t … I’m filing cloture [and we’ll] have a cloture vote on Monday, 5:15.”

That won’t please the GOP. Just before the Democrats’ press conference, Sen. Susan Collins (R-ME), whose vote is still in play on financial reform, implored Reid not to move ahead until a final bipartisan agreement is reached.

“I hope that Senator Reid abandons his plan to force a premature cloture vote on Monday,” Collins told reporters. “I think that would be unfortunate in view of the fact that both sides of the negotiations say that progress is being made.”

Reid is undeterred. “I have been around for quiet a while,” he said. “What we have done on financial reform was just as energetic as what we did on health care. We worked for more than two months with [Sen. Richard] Shelby trying to come up with something … I’m not going to waste any more time of the American people while they come up with some agreement.”

“The games of stalling are over,” Reid said.

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19
Apr
10

Chuck Schumer: 5 Airlines Won’t Charge for Carryons

NEWS
Sen. Charles Ellis Schumer: 5 Airlines Won’t Charge for Carryons

Monday, April 19, 2010

••• U.S. airlines never met a fee they didn’t like. Until now, it seems.

Five major carriers on Sunday agreed not to follow the lead of a small Florida airline that plans to charge for carryon bags. Their commitment comes just in time to keep travellers from running for the exits during the peak summer flying season, but it is doubtful that it marks a change in strategy.

Airlines are going to tack on every fee they feel they can get away with because it bolsters their revenue stream while allowing them to keep base fares lower. They just don’t feel like passengers will tolerate losing their sacred free carryons – at least not right now.
The promise to New York Sen. Charles Schumer from American Airlines, Delta Air Lines, United Airlines, US Airways and JetBlue Airways comes despite the fact that some of those same airlines are expected to report first-quarter losses next week. They were stung by higher fuel prices and the heavy February snowstorms.

Ancillary fees for air travel – including baggage fees, reservation change fees and other miscellaneous operating revenue – have been piling up.

For U.S. carriers they totalled $1.95 billion in the third quarter of 2009, roughly 36 per cent higher than for the same period a year earlier. For 26 large U.S. airlines, those fees made up 6.9 per cent of their total operating revenue in the third quarter of last year, according to the most recent government data available.

But major carriers risk alienating customers if they follow Spirit Airlines’ lead and impose a fee on carryon bags. In August, Spirit will begin charging customers up to $45 to place a bag in an overhead bin.

Other fees haven’t stopped people from flying, but many can be avoided. Carryon bag fees would be hard to avoid.

“We believe it is something that’s important to our customers and they value, and we will continue making that available to them at no charge,” American Airlines spokesman Roger Frizzell said.

It wasn’t clear how long the five airlines had pledged not to charge for carryons. Frizzell couldn’t say, and a spokesman for Delta declined to comment.

Schumer and five other Democratic senators – New Hampshire’s Jeanne Shaheen, Maryland’s Ben Cardin, Minnesota’s Amy Klobuchar, and New Jersey’s Robert Menendez and Frank Lautenberg – support legislation that would tax airlines if they charge carryon bag fees.

Schumer said the legislation will move forward until it becomes clear that no airline will institute the charges. He will have an uphill battle changing the minds of Spirit executives when he meets with them soon.

Spirit CEO Ben Baldanza told The Associated Press on Sunday that his airline is moving ahead with its carryon bag fee.

“Our plan was never predicated on anyone matching us,” Baldanza said. “The fact that other people are saying they won’t has never changed our view that this is right.”

He said his competitors’ decision actually puts pressure on those airlines because Spirit has lowered its fares more than the price of the new fee.

“We knew we took a risk with this strategy, but we believe on balance it’s one that our customers will buy into,” Baldanza said.

Analysts expect several major carriers to get back in the black in the current quarter – the second quarter – and in the second half of the year, thanks to the summer and holiday travel rushes. They wouldn’t want anything like an uproar over carryon bag fees to keep passengers from flying.

Even so, for the financial improvement airlines have seen to be sustainable, revenue needs to keep rising – either through higher fares, more fees or both – and airlines need to better position themselves in case fuel prices spike even higher.

On the last day of the first quarter – March 31 – the price of a barrel of oil closed at $83.76, more than 68 per cent higher than on the same day a year earlier.

That means if major carriers don’t charge for carryons, they could increase existing fees or institute new fees altogether.

Any way you cut it, that adds up to less money in the pockets of U.S. air travellers.

“As a practical matter, as industry conditions change and if profitability is further challenged, we’re likely to see some sort of price increase,” aviation consultant Mark Kiefer said.

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17
Apr
10

Barack Obama defends new consumer agency

NEWS
Barack Obama defends new consumer agency

Saturday, April 17, 2010

President Barack Obama on Saturday challenged opponents of tougher U.S. financial regulations, saying the U.S. is doomed to repeat the economic crisis without new rules and that American taxpayers would again be stuck with the bill.

The bill is the next major piece of legislation that Obama wants to sign into law this year.

“Every day we don’t act, the same system that led to bailouts remains in place, with the exact same loopholes and the exact same liabilities,” Obama said in his weekly radio and internet address. “And if we don’t change what led to the crisis, we’ll doom ourselves to repeat it.

“Opposing reform will leave taxpayers on the hook if a crisis like this ever happens again,” the president said.

A proposal that Senate Democrats are readying for debate creates a mechanism for liquidating large firms to avoid a meltdown. The bill also would regulate the derivatives market for the first time, create a council to detect threats to the system and establish a new consumer protection agency to police people’s dealings with financial institutions.

On Friday, Obama promised to veto the bill if it doesn’t regulate the market for derivatives, instruments such as mortgage-backed securities that contributed to the nation’s economic problems after their value plummeted during the housing crisis.

But Democrats have yet to agree on how far such regulation should go, and all Senate Republicans are solidly against the bill. That opposition complicates Democratic efforts to get the 60 votes necessary to overcome likely Republican procedural roadblocks.

Republicans contend that a provision creating a $50 billion fund for dismantling banks considered “too big to fail” would continue government bailouts of Wall Street. Obama administration officials say such a fund is unnecessary and they want Senate Democrats to remove it.

Obama criticised financial industry interests for opposing the proposed regulations and for waging a “relentless campaign to thwart even basic, common-sense rules”. He repeated his call for Republicans and Democrats to work together to overhaul the system but made it clear that Democrats are prepared to go it alone.

“One way or another, we will move forward,” he said. “This issue is too important.”

In the weekly Republican address, House Minority Whip Eric Cantor criticised government spending and climbing deficits that he said are driving taxes higher.

Cantor said Obama has enacted 25 tax increases passed by the Democratic-controlled Congress that will cost families and small businesses more than $670 billion over the next decade and create a “bleak future for our kids and grandkids”.

He urged a vote for the Republicans in the November congressional elections.

“You have to take action so that we can begin to erase our deficits and free our children from our debt,” Cantor said. “And rather than putting the squeeze on our nation’s job creators and entrepreneurs, we believe in a pro-growth strategy to create jobs and empower the American entrepreneur and small business people to thrive.”

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