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WASHINGTON: President Barack Obama signed a bill Friday morning that breathes new life into the popular Cash for Clunkers program.”Now, more American consumers will have the chance to purchase newer, more fuel efficient cars and the American economy will continue to get a much-needed boost,” President Obama said in a statement.The move extends the Cash for Clunkers program that had burned through its initial 1 billion in funding in its first week.The Senate had voted 60-37 to approve an additional 2 billion for the program late Thursday evening, in a rush to finish business before their August recess. The House had already voted to extend the program last Friday.”This will be a great weekend to go out and buy an American made auto,” Sen. Debbie Stabenow, D-Mich. said in a press conference after the Thursday night vote.During the debate, Senate Republicans offered a half dozen amendments to the program. One would have banned all future bailouts and another would have provided tax credits to spur more home sales.But Sen. Carl Levin, D-Mich., warned that any attachments would bounce the bill back to the House, delaying the program until after the summer break in September.Although the vote mostly went along party lines, seven Republicans voted for it and four Democrats voted against the measure.Getting enough Senate votes to extend the program was no easy task. Levin said late Thursday that this clunkers extension is likely the last Congress is willing to give.”Never say never, but at this point, this is probably the extent of the program,” he said.How it’s going0:00
/5:09Against Cash for ClunkersUnder the Clunkers program as enacted, vehicles purchased after July 1 are eligible for refund vouchers worth 3,500 to 4,500 on traded-in gas guzzlers. The trade-in vehicle has to get a combined city and highway fuel economy rating of 18 miles per gallon or less.According to government figures, compact cars and hybrids have been the top sellers so far. With at least 775 million already spent, the kinds of autos flying off the lots include the Ford Focus, Toyota Corolla and Ford Escape. The government and an independent analysis by Edmunds.com show different results for which cars and trucks are the top sellers.The sales results indicate that consumers are buying more fuel-efficient vehicles than most people expected. The average combined city and highway fuel economy of the 10 cars ranges from at 27 to 33 miles per gallon, depending on which versions people choose. While critics had feared that car shoppers would use the program mostly to buy trucks, in fact 83% of the vehicles traded in have been trucks and SUVs while 60% of vehicles purchased were passenger cars, according to Secretary of Transportation Ray LaHood.The broad category of SUVs includes many small car-like crossover SUVs, including the Escape.Last month, many of the vehicles with the biggest reported year-over-year sales gains were small crossovers, a fact that several of the top automakers attributed to the Cash for Clunkers program.The average fuel economy of new vehicles being purchased under Cash for Clunkers is 25.4 mpg, LaHood said, and the average fuel economy increase from the old vehicle to the new is about 61%.–CNN congressional correspondents and White House senior correspondent Ed Henry contributed to this report. Are you part of a Detroit-area family with a tradition of working in the automotive industry? Send an email to gmannes@moneymail.com and you could be included in an upcoming Money magazine story.

Source:CNN

NEW YORK: After rescuing the nation’s banking system from utter disaster last fall, Washington now faces an arguably much trickier task: putting the bailout genie back in the bottle.Several initiatives are on course to expire later this year, putting regulators and the White House in the difficult position of having to decide whether the nation’s banking industry is strong enough to go it alone.”They would love to get out of the middle of all this stuff if they could,” said John Douglas, a former general counsel at the Federal Deposit Insurance Corp, who now heads the banking regulatory practice at law firm Davis Polk & Wardwell. “The question really is whether the financial system and capital system is vibrant enough to exit without a government backstop.”So far, most of the signs from the banking industry lately have been somewhat encouraging. The credit markets seem to be returning to normal. The London Interbank Offered Rate — or Libor — a widely relied upon measure of bank-to-bank lending rates, is now well below the record high it hit after Lehman Brothers filed for bankruptcy last fall.At the same time, most banks are back in the black. Even embattled lenders Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), both of which were widely believed to be on the verge of being seized by the federal government earlier this year, managed to report their second consecutive quarter of profits in the latest quarter.Of course, much of the financial crisis has been defined by false bottoms, with investors thinking that the worst was over, only to face a more severe scenario just months later. Mostly for that reason, experts think that the programs that helped resolve some of the vicious liquidity issues banks were facing last fall might live on for several more months.”You don’t want to take off a program and have the world end immediately afterward,” said Mark J. Flannery, a professor of finance at the University of Florida’s Warrington College of Business Administration. A big helping of alphabet soupThe FDIC’s Temporary Liquidity Guarantee Program, or TLGP, which regulators have been angling to wind down by the end of October, is one program that might be extended.The TLGP, which guarantees debt issued by banks and ultimately allows them to borrow from the public market at a discounted rate, still remains quite popular even as some large institutions have started to wean themselves off it. Through June, the running total of outstanding guaranteed bank debt stood at 277 billion, 50 billion more than when the program first started last November.Looming troubles in the commercial real estate market have also prompted some lawmakers to push the Federal Reserve to extend its Term Asset-Backed Securities Loan Facility, or TALF, through 2010. That program, which was designed to rekindle the securitization market by providing cheap financing to investors, is set to end on Dec. 31.0:00
/2:13More bank failures aheadLast week, Rep. Paul Kanjorski, D-Pa., who chairs a key House Financial Services subcommittee, along with 40 other members of Congress, urged the central bank to give the program more time to help bridge the 1 trillion in commercial real estate coming due and prevent a massive loss of jobs.”While I would like to wind down the government’s emergency support for the private sector as quickly as possible, we need to provide more time for the TALF program to work in this [commercial real estate] industry,” Kanjorski wrote in a letter to the Fed and Treasury Department. Other more recent proposals, such as the Treasury Department’s Public-Private Investment Program, will also need more time to work. The PPIP, which was beset by multiple delays as regulators tried to figure out the best means of removing many of the troubled assets from banks’ books, is still not up and fully running yet.Finally, Treasury still holds billions of dollars worth of preferred share stakes in hundreds of banks under the Troubled Asset Relief Program, or TARP.Even as some financial firms have exited that controversial program, some strained institutions may have little choice but to retain the government’s investment through the 2012 repayment deadline.The persistence of TARP and various other programs, however, will hardly change the American public’s perception that the government is continuing to bail out corporate America.Mark Calabria, director of financial regulation studies at the Cato Institute, a Washington-based think tank that promotes libertarian views, notes that President Obama is already acutely aware of the stigma that many of these programs carry with them — especially among taxpayers. So while banking regulators may have the final say on which rescue plans stay and which ones go, Calabria said the White House will probably be offering its own suggestions behind the scenes.”I think the president is very much aware that at some point he can’t keep saying it was all George W. Bush,” said Calabria. “I think there is unwillingness on the part of the administration to associate itself with continuing bailouts.”Talkback: How would you grade the Obama administration’s efforts to help fix the nation’s banking system? Share your comments below.

Source:CNN

WASHINGTON (Reuters) — President Barack Obama warned Saturday it would take “many more months” for the United States to get out of recession even after GDP figures showed the economy shrank only modestly in the second quarter.Obama, who has defended his administration’s economic policies vigorously in recent weeks in the face of worsening unemployment numbers, said jobless figures next week would still show that too many Americans were losing work.”It will take many more months to fully dig ourselves out of a recession — a recession that we’ve now learned was even deeper than anyone thought,” Obama said in his weekly radio and Internet address.”And when we receive our monthly job report next week, it is likely to show that we are continuing to lose far too many jobs in this country. As far as I’m concerned, we will not have a recovery as long as we keep losing jobs,” he said.Economists said gross domestic product data Friday provided clear evidence the 19-month recession was almost over.Obama, echoing his comments from the previous day, said that was proof his 787 billion stimulus package and other economic initiatives had shown dividends.”In the last few months, the economy has done measurably better than expected,” Obama said, referring to the GDP report.0:00
/2:50Economy: Here comes the sun”And many economists suggest that part of this progress is directly attributable to the Recovery Act. This and the other difficult but important steps that we have taken over the last six months have helped put the brakes on this recession.”Obama repeated his message that economic growth must come before job growth would follow and said the figures showed the country was moving in a better direction.”The report yesterday on our economy is an important sign that we’re headed in the right direction,” he said.”Business investment, which had been plummeting in the past few months, is showing signs of stabilizing. This means that eventually, businesses will start growing and hiring again.”Obama’s comments on the economy marked a small change in emphasis after weeks of focusing most of his public remarks on healthcare reform.Senator John Thune of South Dakota, in the Republican weekly address, said the Democratic president’s healthcare plans were too expensive.”In this difficult recession, Americans and our government are already over-extended,” Thune said.”The Democrats who control Congress have been spending money and racking up debt at an unprecedented pace, and their plan for government-run health care would only make things worse.”

NEW YORK: Loan servicers will “significantly” increase the pace of mortgage modifications under the Obama foreclosure prevention program, the Treasury Department said Tuesday.The Obama administration wants to see 500,000 trial modifications in place by Nov. 1. Currently, 200,000 are underway.Officials called executives from 25 servicers participating in the program to Washington Tuesday to discuss improving the 5-month-old plan’s implementation. Both the Obama administration and the industry are feeling mounting pressure from borrowers who say their servicers are not responding to their calls and applications, losing their paperwork or not making decisions.”[T]oo many homeowners are at risk of foreclosure right now,” Treasury Secretary Tim Geithner said in a statement Tuesday. “Today’s meeting was an opportunity to identify ways to accelerate the program and bring relief faster.”Announced in February, the loan modification plan allows eligible borrowers who are in or at risk of default to lower their monthly payments to no more than 31% of their pre-tax income through a loan modification. The adjustments are made permanent after the homeowner makes three on-time payments. Homeowners, servicers and mortgage investors receive incentive payments in hopes of increasing participation.So far, the government has committed 20 billion to the effort and has said it would provide 75 billion overall.0:00
/3:57Hope Now’s foreclosure fightMost servicers started implementing the program in April and May, but soon faced harsh criticism as applications flooded in. CNNMoney.com has heard overwhelming negative reviews from the nearly 500 people who wrote in about their experiences.”Obama’s plan is a joke,” wrote Jean in Michigan. “The banks are a joke. fax, fax, fax, call, call, call and no response for months. Even washington rep can’t get an answer or help, what a sham!!!!”Also, the number of people falling behind on their payments continues to mount, especially as unemployment rises. Some 1.5 million people fell into foreclosure in the first half of 2009, up 15% from a year ago.Even President Obama acknowledges that the program is failing to stem the foreclosure tidal wave. “Our mortgage program has actually helped to modify mortgages for a lot of our people, but it hasn’t been keeping pace with all the foreclosures that are taking place,” Obama said last month. The administration has said the plan could help up to 4 million people avoid foreclosure. Though officials said they are on track to reach their goal, the Government Accountability Office cast doubts in a report last week on whether this number could be achieved.To help servicers speed up the modification process, the administration said it will work with the institutions to set more exacting performance measures, such as average borrower wait time, document handling and response time for completed applications. Officials will release their first progress report on each servicer — detailing the number of trail modification offers were extended and are underway — by Aug. 4.Servicers were spending all of Tuesday meeting with Treasury and Housing department officials in the morning and early afternoon, and then with housing counselors in the latter part of the day.In the morning session, servicers said they would like to see a standardization of documents and definitions, which will speed their application review process. Also, they asked the administration to create a Web site where borrowers could apply for a modification and submit their documentation electronically, rather than fax them in. And financial institutions said they are looking into why only 50% of the troubled borrowers they contact respond.”Everyone said they are working hard,” said an industry insider briefed on the discussions.How has President Obama’s 787 billion stimulus program affected you or your community? Are you seeing a benefit from the Making Work Pay tax cuts or the additional 25 in unemployment benefits? Are you seeing construction jobs or other stimulus-funded work in your neighborhood? Do you still have a job because of stimulus funds? We want to hear your experiences. E-mail your story to realstories@cnnmoney.com or send in an iReport and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here.

Source:CNN

NEW YORK: Trying to marshal support for health-care reform, President Obama’s Council of Economic Advisers on Saturday released a report outlining the dire effects the current system has on small companies and their workers. But in mapping out the arguments favoring reform, the report glosses past many details still being debated in Congress that will dramatically affect how costly new health-care laws will be for small businesses.An estimated one-third of uninsured Americans — 13 million people — work for businesses with fewer than 100 employees. Those small companies that do insure their workers pay up to 18% more per worker, on average, than larger firms do for a comparable policy — when they’re able to obtain coverage at all. Among companies with fewer than 10 workers, less than half offer employee health insurance, according to the Council’s report.”Health care is the number-one concern of small businesses,” Small Business Administration head Karen Mills said Friday in a conference call with reporters. “Small businesses don’t have the access they need to affordable health care right now.”President Obama planned to take up that theme during his weekly radio address on Saturday. Through a partnership with social networking site LinkedIn and on WhiteHouse.gov, Obama will solicit feedback this week from the small business community on the health care challenges their companies face. Council of Economic Advisers Chair Christina Romer is scheduling a Facebook chat on Wednesday to field questions.”Small businesses are severely disadvantaged by the current U.S. health care system relative to their larger counterparts,” her group concluded in its report.But as Congress crafts its reform proposals, small business owners face the possibility of sharp short-term pain in pursuit of savings that won’t materialize for years. That’s a problem CEA’s report doesn’t address.The death spiralThe most recent Congressional proposal, from the House of Representatives, would require any company with an annual payroll of 400,000 or more to offer health insurance to workers or pay a penalty totaling 8% of payroll costs. Companies with a payroll under 250,000 would be exempt; those in between would pay reduced penalties. Those penalty payments would help fund a national health insurance exchange through which individuals and small companies could purchase coverage.Pooling small companies together to increase their collective negotiating power is an approach that sounds attractive, but historically, it hasn’t worked. If individuals and small companies can find private insurance elsewhere at better rates, that’s what they buy. That leaves behind in the exchange only high-risk, high-cost customers — exactly the kind of clients insurance companies don’t want.That problem, called “adverse selection,” leads to high premiums for exchange participants and often kicks off a death spiral. One of the largest small business purchasing pools, California’s PacAdvantage, shut down in 2006 after too many of its insurers pulled out.Congress hasn’t settled on a solution to that problem. Any approach relying on a health insurance exchange would also require the government to act as an insurer and participate as a competitor in the exchange — the so-called “public option.” If private insurers don’t step up and offer attractive choices, exchange customers will be able to choose the government plan instead.”That certainly is what the president has proposed,” Romer said Friday. “Making sure that the exchange is stable, that there is ample choice, is something that Congress and the president are both very interested in.”Eroding profitsCEA’s report concludes that the reforms outlined by both chambers of Congress in their competing proposals will benefit small businesses by lowering their health care costs and increasing coverage options for their workers. If the current system continues unchecked, “small business profits will shrink over time because of rising health-care costs that firms cannot fully pass on to workers,” the report says, citing a recent analysis by the Small Business Majority, a pro-reform advocacy group.That analysis found that rising health-care expenses will cost small companies an estimated 700 million in lost profits this year. By 2018, the annual cost of lost profits will reach 12 billion, according to the Small Business Majority’s forecastsBut in the short term, reform will be even more expensive, according to the same analysis. A reform plan similar to the one proposed by the House would reduce small business profits by a whopping 6.5 billion this year. It’s not until 2013 that the reformed system’s savings would increase, rather than reduce, small business profits.”The first years of health care reform will require small businesses to invest profits in expanding health coverage for their employees,” the Small Business Majority wrote in its analysis.That’s a tough request during a recession, when many small business owners have no profits at all.

WASHINGTON (Reuters) — The Obama administration on Wednesday will send Congress legislation demanding that hedge fund managers submit to new registration and disclosure rules to boost transparency and limit any risks they pose to the financial system, a senior U.S. Treasury official said.”Later today, we will send legislative language to the Hill that requires registration of all hedge funds and other private pools of capital over a minimum threshold in size,” Treasury assistant secretary Michael Barr said in prepared remarks to a business group in Washington.The bill, one of many Obama administration proposals to revamp financial regulation, would require all investment advisers with more than 30 million under management to register with the SEC and disclose key information about their funds to regulators and investors.These disclosures would include asset size, borrowings and off-balance-sheet exposures, among other information, Barr said.

Source:CNN

NEW YORK: Mr. President, help us get one of your mortgage workouts now.That’s what many borrowers are saying nearly five months after President Obama unveiled his housing rescue plan. The program is beset with problems, say borrowers, housing counselors and even the president himself. Loan servicers are overwhelmed by the numbers of homeowners applying for loan modifications or refinancing. Borrowers are frustrated that their paperwork is being lost, and calls are not returned. Administration officials are racing to roll out new features to improve the program.Even Obama acknowledges that the program is failing to stem the foreclosure tidal wave.”Our mortgage program has actually helped to modify mortgages for a lot of our people, but it hasn’t been keeping pace with all the foreclosures that are taking place,” Obama said last month. CNNMoney.com has heard from hundreds of troubled homeowners who’ve run into roadblocks. The complaints are often the same: a lack of responsiveness by servicers. Even many of those whose applications are deemed complete say they never receive final approval or are told they can’t be helped now because they haven’t missed a payment.”We are trying to refinance but are getting the runaround from the bank,” Janeen, a Los Angeles homeowner, wrote on a CNNMoney.com Talkback. “[T]hey keep stalling, missing appointments and forgetting to send us paperwork.”Administration officials say they are well aware of the problems and are leaning on the banks to do better. Servicers will have to report the results of their efforts within the next month or two, opening them up to public and government scrutiny, said Seth Wheeler, senior adviser at the Treasury Department. But don’t expect the hurdles to go away anytime soon.”Immediately, we want to see an improvement in borrower experience, but I don’t think that means we will see a resolution of every hiccup in the process,” Wheeler said. “We should see over the course of the summer real improvement, but those challenges will linger well into the fall certainly.”Under the Obama plan, people with little or no equity in their home can refinance to take advantage of today’s low mortgage rates. The plan allows people to participate even if they have loans of up to 125% of the value of their property, as long as they meet other criteria. Also, eligible borrowers who are in or at risk of default may be able to lower their monthly payments to no more than 31% of their pre-tax income through a loan modification. Homeowners, servicers and mortgage investors can receive incentives to entice them to participate.Announced in February and implemented by most servicers starting in April, the program has produced more than 200,000 trial modifications and 20,000 refinancings. Borrowers in the loan modification program must make three on-time payments before the adjustment is considered official.Foreclosures risingWhile the administration often highlights that the program has helped a lot of people in a short period of time, it has a long way to go if it is to truly stem the foreclosure crisis, experts say.Nearly 1.5 million homes have received a foreclosure filing in the first five months of the year, according to RealtyTrac. Defaults are on track to hit 3.5 million this year, according to Mark Zandi of Moody’s Economy.com. Foreclosures in process jumped in the first quarter by 22% over the previous quarter, according to data released last week by the Office of the Comptroller of the Currency and Office of Thrift Supervision. The number of mortgages that were more than 60 days past-due rose 7%, but delinquencies among prime borrowers with the best credit backgrounds soared nearly 20% as rising unemployment takes its toll.”This system is not running at the level of efficiency that it has to,” said Barry Zigas, director of housing policy for the Consumer Federation of America.Getting through to the banks isn’t easy. Distressed borrowers have told CNNMoney.com that they are in danger of losing their homes because their banks are not able to handle the flood of applications for the president’s foreclosure prevention plan. In addition to problems with lost documents and endless waits on hold, borrowers complain they never receive an answer or are told they can’t be helped because they are still current with payments.Tanya in Jacksonville, Fla., wrote in the Talkback that she has contacted her servicer 27 times since applying for a loan modification in April, faxed all the documents six times and is still not getting help. “So still I wait. Still I have no assistace[sic] in my loan!”"Now it has been a month since I returned all the proper paper work and have received no correspondence,” wrote Craig of Howell, Mich., who is seeking to refinance. “I call the loan officer I spoke with at least once a week and she refuses to return my phone calls!! Getting a person on the phone who is [knowledgeable] is next to impossible since everyone there makes Forest Gump look like Albert Einstein. I’m simply fed up with this whole process.”Housing counselors, who help distressed borrowers navigate the system, are quite familiar with stories such as these. Much of the bottlenecks stem from the fact that servicers have not hired nor trained enough staff, nor have they fully updated their computer systems to handle the administration’s program, said Bruce Dorpalen, director of housing counseling for Acorn Housing.”There’s no excuse for this,” he said. “The servicers are not able to make decisions, or good decisions.”Still ramping up0:00
/3:57Hope Now’s foreclosure fightBanks and government officials say the foreclosure prevention program is very complicated, requiring a lot of training, system upgrading and documentation. Therefore, the institutions need time to ramp up.”We have a new plan that’s also more complex than any other plan,” said Faith Schwartz, who heads Hope Now, a coalition of servicers, community groups and mortgage investors working to stem foreclosures. “The banks have tripled, quadrupled their staffs. It will be effective. We’ll see more in the fall.”Citigroup (C, Fortune 500), for instance, said it is trying to resolve cases as expeditiously as possible, while JPMorgan Chase (JPM, Fortune 500) has touted the fact that it had approved 87,000 applications by June 30. Both banks said they are looking to improve.The Treasury Department is pressuring servicers to streamline the application process. And officials say they will check to make sure banks are following the guidelines.The soon-to-be-issued reports will include how many loan modifications and refinancings have been extended and how many are underway at each institution. Servicers with low approval levels or high complaint figures will raise red flags. Also, the administration has hired Freddie Mac (F, Fortune 500), the mortgage finance firm now under the government’s control, to check the applications that have been approved and rejected.”It’s not just that we’re hoping that servicers get out there and get results,” Wheeler said.

NEW YORK: The Obama administration is widening its mortgage refinancing program to allow more borrowers hit hard by falling home prices to take part.Borrowers whose loans are now worth up to 125% of their home’s value are now eligible to refinance their homes under the Obama foreclosure prevention plan announced in February. Previously, the limit was 105%.The move acknowledges that home prices in many areas have fallen so far that many people were shut out of the program. Some 67% of homeowners in Las Vegas — one of the hardest hit areas where Housing Secretary Shaun Donovan announced the expansion Wednesday — owe more than their homes are worth.”The president’s Making Home Affordable plan is already helping far more than any previous foreclosure initiative and with today’s announcement we will extend its reach still further,” said Donovan.Some 20,000 loans have been refinanced so far, according to the Treasury Department. The initiative waives the requirement that homeowners have at least 20% equity in their home, allowing to take advantage of today’s lower rates. Homeowners must still meet other criteria, including being current on their payments and having loans that are owned or backed by Fannie Mae or Freddie Mac.The program, however, has been slow to ramp up. Borrowers have complained that banks are not approving their applications, and a recent uptick in mortgage prices has blunted the plan’s benefit.The Mortgage Bankers Association last week slashed its 2009 forecast of originations because fewer refinancings were being done than they originally expected. The group said only 13,000 were done in the three months after the plan’s launch.0:00
/3:57Hope Now’s foreclosure fightThe administration has projected that 4 million to 5 million mortgage borrowers would be helped. A Treasury official Tuesday said that the figure applied to those who would be eligible, not necessarily those who would participate.A second part of the program lets eligible borrowers who are in default — or at risk — lower their monthly payments to no more than 31% of their pre-tax income. This can help those who are not making as much at their jobs or who have monthly payments they can’t handle. Homeowners, servicers and mortgage investors can receive incentives to entice them to participate in the program.

Source:CNN

WASHINGTON: President Obama offered a passionate defense of the Federal Reserve on Tuesday, explaining his proposal to put the central bank in charge of monitoring broad risks facing the financial system.Obama, speaking at a midday press conference, defended the performance of Fed Chairman Ben Bernanke after the financial crisis. Bernanke has done a “fine job” and “performed well,” the president said. In addition, Obama answered criticism, some of it resonating from members of his own party in the Senate, that giving the Fed authority to monitor systemic risk would endow it with too much power.”If you look at what we’ve proposed, we are not so much expanding the Fed’s power as we are focusing what the Fed needs to do, to prevent the kinds of crises that are happening,” Obama said. Obama last week presented an 88-page list of proposals to revamp parts of the system that regulate financial firms and products. On Tuesday, Obama said that one of the reform proposals actually removes one Fed power: enforcing consumer protection. He wants to create a new agency to enforce consumer protection of financial products like mortgages and credit cards.However, under Obama’s plan, the Fed would be charged with making sure giant banks and insurance companies have enough capital to back up the big financial bets they’re making.Republicans and some key Democrats, such as Banking Committee Chairman Sen. Chris Dodd, D-Conn., are still perturbed that the Fed didn’t do enough to monitor risk among the banks it already had under its watch.0:00
/5:01The Fed’s heavier handObama on Tuesday acknowledged the criticism. He said even the Fed would be the “first to acknowledge in dealing with systemic risk and anticipating systemic risk, they didn’t do everything that needed to be done.”But Obama said he believed the Fed did better than most other regulators before the crisis started.”I would say that all financial regulators didn’t do everything that needed to be done to prevent the crisis that happened,” he said. “That’s why we put forward the boldest set of reforms in financial regulations in 75 years — because there were too many gaps.”But the president went further in explaining why he wants Bernanke to be the one in charge of systemic risk. He said he believes the Fed has “the most technical expertise and the best track record in terms of doing that.”

Source:CNN

NEW YORK (CNNMONEY.COM) — The Mortgage Bankers Association on Monday slashed its estimate of the number of mortgages its members will issue in 2009. One reason: Few refinancings are being done under the Obama administration’s ballyhooed Home Affordable Refinance Program.The MBA is forecasting mortgage originations of 2.03 trillion for the year, a drop of over 700 billion from its March forecast with more than 600 billion of the drop due to fewer refinancings than originally predicted. 0:00
/2:29Stimulus blasted as wastefulOnly 13,000 HARP refinancings have been completed during the first three months after the program’s launch, according to the MBA. Policy makers originally projected that 4 to 5 million mortgage borrowers would take advantage of the program over the next year.HARP targets borrowers with loans guaranteed or owned by mortgage giants Fannie Mae and Freddie Mac, and it enables them to qualify for refinancing into a lower rate if their balances are too high relative to their home values.But the MBA is skeptical that HARP numbers will ever hit projections.”While the number of loans completed under this program is likely to increase,” said Jay Brinkmann, chief economist for the MBA in a release announcing the lowering of origination estimates, “it is difficult to craft a scenario under which origination volumes would come anywhere close to reaching the numbers originally envisioned for the program, particularly under our higher rate environment.”One reason why HARP hasn’t taken off yet is that lenders/servicers are still gearing up to handle it, according to John Courson, president of the MBA. It’s not as simple as a regular refi, he said. Plus, Fannie and Freddie have different procedures and guidelines for the loans, and servicers have had to learn both. Freddie loans, in particular, were problematic, Courson said. The company decreed that only the actual servicer of a particular loan could issue a refi. He said Fannie allowed any approved servicer to do so.Applications flood lendersCourson also noted that servicers were flooded with requests for refinancings from their regular customers because interest rates had dropped so low. A 30-year, fixed-rate loan averaged well below 5%, and as low as 4.78%, from mid-March through the end of May, according to Freddie Mac’s weekly survey.The lenders were more likely to process applications from regular clients first, before moving on to HARP borrowers, according to Courson.”If you’re a lender and the refi volume is coming in, you do the easiest ones first,” he said. “If I have a 70% [loan to value], a real clean deal, I’m going to do that one first. The others may get pushed to the side.”Courson does believe that HARP refis will eventually pick up. Ironically, the increased interest rates of recent weeks have caused normal refi requests to drop, giving lenders more incentive to go after the HARP refis, which are a source of profit that they’re not fully exploiting.”Other refi opportunities are drying up,” said Courson, “and lenders could turn to these loans.”If interest rates return to sub 5% territory, that could lure back more regular refi customers and HARP borrowers could again be given short shrift, he said. But Courson does not think rates will go that will happen.”My prediction is that the volume for this program will pick up,” he said. He demurred, however, from forecasting that HARP volume will ever reach the 4 million to 5 million originally estimated.

Source:CNN