By TOM RAUM
WASHINGTON (AP) - The Founding Fathers left one legacy not celebrated on Independence Day but which affects us all. It's the national debt.
The country first got into debt to help pay for the Revolutionary War. Growing ever since, the debt stands today at a staggering $11.4 trillion - equivalent to about $37,000 for each and every American. And it's expanding by over $1 trillion a year.
The mountain of debt easily could become the next full-fledged economic crisis without firm action from Washington, economists of all stripes warn.
"Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth," Federal Reserve Chairman Ben Bernanke recently told Congress.
Higher taxes, or reduced federal benefits and services - or a combination of both - may be the inevitable consequences.
The debt is complicating efforts by President Barack Obama and Congress to cope with the worst recession in decades as stimulus and bailout spending combine with lower tax revenues to widen the gap.
Interest payments on the debt alone cost $452 billion last year - the largest federal spending category after Medicare-Medicaid, Social Security and defense. It's quickly crowding out all other government spending. And the Treasury is finding it harder to find new lenders.
The United States went into the red the first time in 1790 when it assumed $75 million in the war debts of the Continental Congress.
Alexander Hamilton, the first treasury secretary, said, "A national debt, if not excessive, will be to us a national blessing."
Some blessing.
Since then, the nation has only been free of debt once, in 1834-1835.
The national debt has expanded during times of war and usually contracted in times of peace, while staying on a generally upward trajectory. Over the past several decades, it has climbed sharply - except for a respite from 1998 to 2000, when there were annual budget surpluses, reflecting in large part what turned out to be an overheated economy.
The debt soared with the wars in Iraq and Afghanistan and economic stimulus spending under President George W. Bush and now Obama.
The odometer-style "debt clock" near Times Square - put in place in 1989 when the debt was a mere $2.7 trillion - ran out of numbers and had to be shut down when the debt surged past $10 trillion in 2008.
The clock has since been refurbished so higher numbers fit. There are several debt clocks on Web sites maintained by public interest groups that let you watch hundreds, thousands, millions zip by in a matter of seconds.
The debt gap is "something that keeps me awake at night," Obama says.
He pledged to cut the budget "deficit" roughly in half by the end of his first term. But "deficit" just means the difference between government receipts and spending in a single budget year.
This year's deficit is now estimated at about $1.85 trillion.
Deficits don't reflect holdover indebtedness from previous years. Some spending items - such as emergency appropriations bills and receipts in the Social Security program - aren't included, either, although they are part of the national debt.
The national debt is a broader, and more telling, way to look at the government's balance sheets than glancing at deficits.
According to the Treasury Department, which updates the number "to the penny" every few days, the national debt was $11,518,472,742,288 on Wednesday.
The overall debt is now slightly over 80 percent of the annual output of the entire U.S. economy, as measured by the gross domestic product.
By historical standards, it's not proportionately as high as during World War II, when it briefly rose to 120 percent of GDP. But it's still a huge liability.
Also, the United States is not the only nation struggling under a huge national debt. Among major countries, Japan, Italy, India, France, Germany and Canada have comparable debts as percentages of their GDPs.
Where does the government borrow all this money from?
The debt is largely financed by the sale of Treasury bonds and bills. Even today, amid global economic turmoil, those still are seen as one of the world's safest investments.
That's one of the rare upsides of U.S. government borrowing.
Treasury securities are suitable for individual investors and popular with other countries, especially China, Japan and the Persian Gulf oil exporters, the three top foreign holders of U.S. debt.
But as the U.S. spends trillions to stabilize the recession-wracked economy, helping to force down the value of the dollar, the securities become less attractive as investments. Some major foreign lenders are already paring back on their purchases of U.S. bonds and other securities.
And if major holders of U.S. debt were to flee, it would send shock waves through the global economy - and sharply force up U.S. interest rates.
As time goes by, demographics suggest things will get worse before they get better, even after the recession ends, as more baby boomers retire and begin collecting Social Security and Medicare benefits.
While the president remains personally popular, polls show there is rising public concern over his handling of the economy and the government's mushrooming debt - and what it might mean for future generations.
If things can't be turned around, including establishing a more efficient health care system, "We are on an utterly unsustainable fiscal course," said the White House budget director, Peter Orszag.
Some budget-restraint activists claim even the debt understates the nation's true liabilities.
The Peter G. Peterson Foundation, established by a former commerce secretary and investment banker, argues that the $11.4 trillion debt figures does not take into account roughly $45 trillion in unlisted liabilities and unfunded retirement and health care commitments.
That would put the nation's full obligations at $56 trillion, or roughly $184,000 per American, according to this calculation.
Showing posts with label AP. Show all posts
Showing posts with label AP. Show all posts
Saturday, July 4, 2009
Thursday, May 21, 2009
When to plug Fed's flow?
By Tom Raum • The Associated Press • May 17, 2009
This item appeared in the Cincinnati Enquirer
WASHINGTON - The federal government has committed trillions of dollars to domestic bailouts and propping up the recessionary economy, much of it borrowed, much created out of thin air by the Federal Reserve.
How much longer can all this go on? That's the pressing question facing policymakers, and one without a clear answer.
At some point, "You have to take away the punchbowl, as someone once said, in order to avoid the inflation risk," said Federal Reserve Chairman Ben Bernanke, paraphrasing William McChesney Martin Jr., who served as Fed chairman in the 1950s and '60s under five presidents.
But change course too soon, and it could nip a fragile recovery in the bud. Wait too long, and runaway inflation and gargantuan federal debt could be the sequel to the worst downturn since the 1930s.
While nobody thinks the current combination of near-zero interest rates, bank and auto bailouts and trillion-dollar annual deficits is a sustainable economic model, knowing just when to take away the punchbowl is the problem.
For now, the Bernanke Fed is still filling the punchbowl. And President Barack Obama and the Democratic-controlled Congress are doing the same with government spending.
One reason the Fed has been so aggressive in slashing rates and taking unconventional recession-fighting steps is because "we are trying to avoid another form of price instability, which is deflation," Bernanke told a Fed financial conference last week.
The risk of deflation - a widespread and prolonged decline in retail prices, wages and real estate and other asset values - is "receding, but it certainly needs not to be ignored," Bernanke said.
Despite some recent glimmers of hope, evidence is mixed on whether things are getting better or still worse. Disappointing reports Wednesday on falling retail sales and a jump in foreclosures fueled continuing uncertainties and helped push stocks down.
"You've got to take the stimulus off at some point. I don't think that point is this year," said David Wyss, chief economist at Standard & Poor's in New York. He said Wednesday's reports on weak retail sales for April point to a continuing recession, despite some recent encouraging signs.
Government and most private economists expect the recession, which began in December 2007, to end later this year, although they expect high levels of joblessness to continue beyond.
In the meantime, recent developments are complicating efforts to tame the deficit once the recession does end:
White House budget officials said recently that the deficit would widen to a record $1.8 trillion this year, $89 billion more than their estimate in February. They blamed the recession.
With nearly 80 million baby boomers nearing retirement, the government reported that Medicare and Social Security will face insolvency sooner than previously projected because of the recession - for Medicare in 2017 and for Social Security in 2037.
A potential $90 billion shortfall opened up in paying for Obama's health care proposal. The gap comes from congressional reluctance to go along with his proposal to help pay for the plan by limiting high-income families' charitable-giving and other tax deductions. House Speaker Nancy Pelosi said the health care bill will be on the House floor before the August recess.
The administration asked Congress on Tuesday to add $100 billion in new U.S. contributions to the International Monetary Fund as part of a war-spending bill.
Obama proposed just $17 billion in new spending cuts earlier this month, representing savings of less than one-half of 1 percent in his $3.4 trillion budget. Republicans scoffed - and some top Democrats criticized him for targeting popular programs in recessionary times.
By some accounts, the sum of all the U.S. grants, loans, guarantees and new money created electronically by the Fed since the financial crisis began totals some $11 trillion - roughly equal to the country's national debt.
That sum does include loan guarantees that might not be needed, money that hasn't been spent, various revolving accounts and U.S. investments in bad mortgages and other toxic, hard-to-value securities that could someday return money to taxpayers. Still, staggering amounts are involved.
"We are creating a government debt bubble that we're going to have to deal with in a massive way," suggested Rep. Kevin Brady of Texas, the senior Republican on the Congressional Joint Economic Committee.
History shows the dangers of calling the end of economic downturns too soon.
President Franklin D. Roosevelt made this mistake in 1936 when, believing the Depression largely over, he sought to pare back public spending and to balance the federal budget. It torpedoed a fragile recovery and pushed the economy back under water in 1937.
Japanese leaders made a similar mistake in the 1990s when they prematurely - and temporarily - withdrew government stimulus spending, helping to prolong Japan's recession to one that lasted a full decade.
At the White House, presidential spokesman Robert Gibbs dismissed suggestions by some, including Liz Ann Sonders, chief investment strategist for brokerage Charles Schwab, that the recession may have ended.
"I can report nobody has intoned that message" at daily White House economic briefings, Gibbs said. "There's much work to be done."
Veteran budget analyst Stanley Collender said increases in public spending are an important fiscal tool and that "a bigger deficit is justified in the current economic environment."
Furthermore, Collender added, if Obama doesn't push his agenda for more health care, energy and education spending now, when will he?
"He's got a 60-percent-plus approval rating. And Democrats are willing to work with him. He should go for it now. He's never going to get a better chance," Collender said.
This item appeared in the Cincinnati Enquirer
WASHINGTON - The federal government has committed trillions of dollars to domestic bailouts and propping up the recessionary economy, much of it borrowed, much created out of thin air by the Federal Reserve.
How much longer can all this go on? That's the pressing question facing policymakers, and one without a clear answer.
At some point, "You have to take away the punchbowl, as someone once said, in order to avoid the inflation risk," said Federal Reserve Chairman Ben Bernanke, paraphrasing William McChesney Martin Jr., who served as Fed chairman in the 1950s and '60s under five presidents.
But change course too soon, and it could nip a fragile recovery in the bud. Wait too long, and runaway inflation and gargantuan federal debt could be the sequel to the worst downturn since the 1930s.
While nobody thinks the current combination of near-zero interest rates, bank and auto bailouts and trillion-dollar annual deficits is a sustainable economic model, knowing just when to take away the punchbowl is the problem.
For now, the Bernanke Fed is still filling the punchbowl. And President Barack Obama and the Democratic-controlled Congress are doing the same with government spending.
One reason the Fed has been so aggressive in slashing rates and taking unconventional recession-fighting steps is because "we are trying to avoid another form of price instability, which is deflation," Bernanke told a Fed financial conference last week.
The risk of deflation - a widespread and prolonged decline in retail prices, wages and real estate and other asset values - is "receding, but it certainly needs not to be ignored," Bernanke said.
Despite some recent glimmers of hope, evidence is mixed on whether things are getting better or still worse. Disappointing reports Wednesday on falling retail sales and a jump in foreclosures fueled continuing uncertainties and helped push stocks down.
"You've got to take the stimulus off at some point. I don't think that point is this year," said David Wyss, chief economist at Standard & Poor's in New York. He said Wednesday's reports on weak retail sales for April point to a continuing recession, despite some recent encouraging signs.
Government and most private economists expect the recession, which began in December 2007, to end later this year, although they expect high levels of joblessness to continue beyond.
In the meantime, recent developments are complicating efforts to tame the deficit once the recession does end:
White House budget officials said recently that the deficit would widen to a record $1.8 trillion this year, $89 billion more than their estimate in February. They blamed the recession.
With nearly 80 million baby boomers nearing retirement, the government reported that Medicare and Social Security will face insolvency sooner than previously projected because of the recession - for Medicare in 2017 and for Social Security in 2037.
A potential $90 billion shortfall opened up in paying for Obama's health care proposal. The gap comes from congressional reluctance to go along with his proposal to help pay for the plan by limiting high-income families' charitable-giving and other tax deductions. House Speaker Nancy Pelosi said the health care bill will be on the House floor before the August recess.
The administration asked Congress on Tuesday to add $100 billion in new U.S. contributions to the International Monetary Fund as part of a war-spending bill.
Obama proposed just $17 billion in new spending cuts earlier this month, representing savings of less than one-half of 1 percent in his $3.4 trillion budget. Republicans scoffed - and some top Democrats criticized him for targeting popular programs in recessionary times.
By some accounts, the sum of all the U.S. grants, loans, guarantees and new money created electronically by the Fed since the financial crisis began totals some $11 trillion - roughly equal to the country's national debt.
That sum does include loan guarantees that might not be needed, money that hasn't been spent, various revolving accounts and U.S. investments in bad mortgages and other toxic, hard-to-value securities that could someday return money to taxpayers. Still, staggering amounts are involved.
"We are creating a government debt bubble that we're going to have to deal with in a massive way," suggested Rep. Kevin Brady of Texas, the senior Republican on the Congressional Joint Economic Committee.
History shows the dangers of calling the end of economic downturns too soon.
President Franklin D. Roosevelt made this mistake in 1936 when, believing the Depression largely over, he sought to pare back public spending and to balance the federal budget. It torpedoed a fragile recovery and pushed the economy back under water in 1937.
Japanese leaders made a similar mistake in the 1990s when they prematurely - and temporarily - withdrew government stimulus spending, helping to prolong Japan's recession to one that lasted a full decade.
At the White House, presidential spokesman Robert Gibbs dismissed suggestions by some, including Liz Ann Sonders, chief investment strategist for brokerage Charles Schwab, that the recession may have ended.
"I can report nobody has intoned that message" at daily White House economic briefings, Gibbs said. "There's much work to be done."
Veteran budget analyst Stanley Collender said increases in public spending are an important fiscal tool and that "a bigger deficit is justified in the current economic environment."
Furthermore, Collender added, if Obama doesn't push his agenda for more health care, energy and education spending now, when will he?
"He's got a 60-percent-plus approval rating. And Democrats are willing to work with him. He should go for it now. He's never going to get a better chance," Collender said.
Wednesday, March 4, 2009
Violence between repo men, car owners on the rise
HALSELL, Ala. (AP) - With the economy in shambles, auto reposessions are expected to rise, and violence along with them.
The shooting death of Alabama resident Jimmy Tanks by a repo man in the wee hours of June 26 points to part of the problem. The local sheriff says Tanks did what anyone would have done at 2:30 a.m.—he went outside, armed, to check on the noise.
The repo man, Kenneth Alvin Smith, who faces murder charges, says Tanks fired first.Part of the problem is a largely unregulated industry nationally.
Since Tanks’ death, two other repo men from the same company Smith worked for were shot, one fatally.
Joe Taylor, whose Florida-based company insures repossession companies, said licensing and training is the answer.
All three Alabama shootings were in the middle of the night. An industry leader says that’s a problem, and that smart operators don’t work those hours.
The shooting death of Alabama resident Jimmy Tanks by a repo man in the wee hours of June 26 points to part of the problem. The local sheriff says Tanks did what anyone would have done at 2:30 a.m.—he went outside, armed, to check on the noise.
The repo man, Kenneth Alvin Smith, who faces murder charges, says Tanks fired first.Part of the problem is a largely unregulated industry nationally.
Since Tanks’ death, two other repo men from the same company Smith worked for were shot, one fatally.
Joe Taylor, whose Florida-based company insures repossession companies, said licensing and training is the answer.
All three Alabama shootings were in the middle of the night. An industry leader says that’s a problem, and that smart operators don’t work those hours.
Friday, February 13, 2009
Democrats muscle huge stimulus to brink of passage
WASHINGTON (AP) — In a major victory for President Barack Obama, Democrats muscled a huge, $787 billion stimulus bill to the brink of final passage Friday night in hopes of combating the worst economic crisis since the Great Depression. Republican opposition was nearly unanimous.
The vote in the House was 246-183 for the package of tax cuts and federal spending that Obama made the centerpiece of his plan for economic recovery.
The Senate was following suit in a roll call that was without suspense but extended into the night. That was to allow time for Democratic Sen. Sherrod Brown to fly back from Ohio, where his mother died earlier in the week. His was the decisive 60th vote for the bill.
Obama is expected to sign the bill soon.
Supporters said the measure would save or create 3.5 million jobs. House Majority Leader Steny Hoyer conceded there was no guarantee, but he said that "millions and millions and millions of people will be helped, as they have lost their jobs and can't put food on the table of their families."
Vigorously disagreeing, House Republican leader John Boehner of Ohio dumped a copy of the 1,071-page bill to the floor in a gesture of contempt. "The bill that was about jobs, jobs, jobs has turned into a bill that's about spending, spending, spending," he said. No House Republican voted for the measure.
The legislation, among the costliest ever considered in Congress, provides billions of dollars to aid victims of the recession through unemployment benefits, food stamps, medical care, job retraining and more. Tens of billions are ticketed for the states to offset cuts they might otherwise have to make in aid to schools and local governments, and there is more than $48 billion for transportation projects such as road and bridge construction, mass transit and high-speed rail.
Democrats said the bill's tax cuts would help 95 percent of all Americans, much of the relief in the form of a break of $400 for individuals and $800 for couples. At the insistence of the White House, people who do not earn enough money to owe income taxes are eligible, an attempt to offset the payroll taxes they pay.
In a bow to political reality, lawmakers included $70 billion to shelter upper middle-class and wealthier taxpayers from an income tax increase that would otherwise hit them, a provision that the nonpartisan Congressional Budget Office said would do relatively little to create jobs.
Also included were funds for two of Obama's initiatives, the expansion of computerized information technology in the health care industry and billions to create so-called green jobs the administration says will begin reducing the country's dependence on foreign oil.
Asked for his reaction to House passage of the bill, Obama said "thumbs up" and indeed gave a thumbs-up sign as he left the White House with his family for a long weekend in Chicago.
Congress cast its votes as federal regulators announced the closing of the Sherman County Bank in Loup City, Neb.; Riverside Bank of the Gulf Coast in Florida, based in Cape Coral; Corn Belt Bank and Trust Co. of Pittsfield, Ill.; and Pinnacle Bank of Beaverton, Ore. They raised to 13 the number of failures this year of federally insured banking companies and were the latest reminders of the toll taken by recession and frozen credit markets.
The day's events at the Capitol were scripted to allow Democratic leaders to fulfill their pledge to send Obama legislation by mid-February.
"Barack Obama, in just a few short weeks as president, has passed one of the biggest packages for economic recovery in our nation's history," said House Speaker Nancy Pelosi, anticipating final Senate passage.
The approval also capped an early period of accomplishment for the Democrats, who won control of the White House and expanded their majorities in Congress in last fall's elections.
Since taking office on Jan. 20, the president has signed legislation extending government-financed health care to millions of lower-income children who lack it, a bill that President George W. Bush twice vetoed. He also has placed his signature on a measure making it easier for workers to sue their employers for alleged job discrimination, effectively overturning a ruling by the Supreme Court's conservative majority.
Obama made the stimulus a cornerstone of his economic recovery plan even before he took office, but his calls for bipartisanship were an early casualty.
Republicans complained they had been locked out of the early decisions, and Democrats countered that Boehner had tried to rally opposition even before the president met privately with the GOP rank and file.
In retrospect, said White House chief of staff Rahm Emanuel, the White House wasn't "sharp enough" in emphasizing the benefits of the bill as Republicans began to criticize spending on items such as family planning services, anti-smoking programs and reseeding the National Mall.
Senate Majority Leader Harry Reid faced a different task _ finding enough GOP moderates to give him the 60 votes needed to surmount a variety of procedural hurdles. To do that, he and the White House agreed to trim billions in spending from the original $820 billion House-passed bill, enough to obtain the backing of GOP Sens. Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania.
As the final compromise took shape in a frenzied round of bargaining earlier this week, it was trimmed again to hold the support of the moderates, whose opposition to a new program for federal school construction caused anger among House Democrats.
In the end, a compromise was reached that allows states to use funds for modernizing schools. But in a display of displeasure, Pelosi decided to skip the news conference last Wednesday where Reid announced a final agreement.
In addition to tax relief for individuals and businesses who purchase new equipment, lawmakers inserted breaks for first-time homebuyers and consumers purchasing new cars in an attempt to aid two industries particularly hard-hit by the recession. In response to pressure from lawmakers from Pennsylvania, Indiana and elsewhere, the bill was altered at the last minute to permit the buyers of recreational vehicles and motorcycles to claim the same break as those buying cars and light trucks.
In the House, all 246 votes in favor were cast by Democrats. Seven Democrats joined 176 Republicans in opposition.
The vote in the House was 246-183 for the package of tax cuts and federal spending that Obama made the centerpiece of his plan for economic recovery.
The Senate was following suit in a roll call that was without suspense but extended into the night. That was to allow time for Democratic Sen. Sherrod Brown to fly back from Ohio, where his mother died earlier in the week. His was the decisive 60th vote for the bill.
Obama is expected to sign the bill soon.
Supporters said the measure would save or create 3.5 million jobs. House Majority Leader Steny Hoyer conceded there was no guarantee, but he said that "millions and millions and millions of people will be helped, as they have lost their jobs and can't put food on the table of their families."
Vigorously disagreeing, House Republican leader John Boehner of Ohio dumped a copy of the 1,071-page bill to the floor in a gesture of contempt. "The bill that was about jobs, jobs, jobs has turned into a bill that's about spending, spending, spending," he said. No House Republican voted for the measure.
The legislation, among the costliest ever considered in Congress, provides billions of dollars to aid victims of the recession through unemployment benefits, food stamps, medical care, job retraining and more. Tens of billions are ticketed for the states to offset cuts they might otherwise have to make in aid to schools and local governments, and there is more than $48 billion for transportation projects such as road and bridge construction, mass transit and high-speed rail.
Democrats said the bill's tax cuts would help 95 percent of all Americans, much of the relief in the form of a break of $400 for individuals and $800 for couples. At the insistence of the White House, people who do not earn enough money to owe income taxes are eligible, an attempt to offset the payroll taxes they pay.
In a bow to political reality, lawmakers included $70 billion to shelter upper middle-class and wealthier taxpayers from an income tax increase that would otherwise hit them, a provision that the nonpartisan Congressional Budget Office said would do relatively little to create jobs.
Also included were funds for two of Obama's initiatives, the expansion of computerized information technology in the health care industry and billions to create so-called green jobs the administration says will begin reducing the country's dependence on foreign oil.
Asked for his reaction to House passage of the bill, Obama said "thumbs up" and indeed gave a thumbs-up sign as he left the White House with his family for a long weekend in Chicago.
Congress cast its votes as federal regulators announced the closing of the Sherman County Bank in Loup City, Neb.; Riverside Bank of the Gulf Coast in Florida, based in Cape Coral; Corn Belt Bank and Trust Co. of Pittsfield, Ill.; and Pinnacle Bank of Beaverton, Ore. They raised to 13 the number of failures this year of federally insured banking companies and were the latest reminders of the toll taken by recession and frozen credit markets.
The day's events at the Capitol were scripted to allow Democratic leaders to fulfill their pledge to send Obama legislation by mid-February.
"Barack Obama, in just a few short weeks as president, has passed one of the biggest packages for economic recovery in our nation's history," said House Speaker Nancy Pelosi, anticipating final Senate passage.
The approval also capped an early period of accomplishment for the Democrats, who won control of the White House and expanded their majorities in Congress in last fall's elections.
Since taking office on Jan. 20, the president has signed legislation extending government-financed health care to millions of lower-income children who lack it, a bill that President George W. Bush twice vetoed. He also has placed his signature on a measure making it easier for workers to sue their employers for alleged job discrimination, effectively overturning a ruling by the Supreme Court's conservative majority.
Obama made the stimulus a cornerstone of his economic recovery plan even before he took office, but his calls for bipartisanship were an early casualty.
Republicans complained they had been locked out of the early decisions, and Democrats countered that Boehner had tried to rally opposition even before the president met privately with the GOP rank and file.
In retrospect, said White House chief of staff Rahm Emanuel, the White House wasn't "sharp enough" in emphasizing the benefits of the bill as Republicans began to criticize spending on items such as family planning services, anti-smoking programs and reseeding the National Mall.
Senate Majority Leader Harry Reid faced a different task _ finding enough GOP moderates to give him the 60 votes needed to surmount a variety of procedural hurdles. To do that, he and the White House agreed to trim billions in spending from the original $820 billion House-passed bill, enough to obtain the backing of GOP Sens. Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania.
As the final compromise took shape in a frenzied round of bargaining earlier this week, it was trimmed again to hold the support of the moderates, whose opposition to a new program for federal school construction caused anger among House Democrats.
In the end, a compromise was reached that allows states to use funds for modernizing schools. But in a display of displeasure, Pelosi decided to skip the news conference last Wednesday where Reid announced a final agreement.
In addition to tax relief for individuals and businesses who purchase new equipment, lawmakers inserted breaks for first-time homebuyers and consumers purchasing new cars in an attempt to aid two industries particularly hard-hit by the recession. In response to pressure from lawmakers from Pennsylvania, Indiana and elsewhere, the bill was altered at the last minute to permit the buyers of recreational vehicles and motorcycles to claim the same break as those buying cars and light trucks.
In the House, all 246 votes in favor were cast by Democrats. Seven Democrats joined 176 Republicans in opposition.
Thursday, June 5, 2008
AP: Foreclosures hit a record high - and more coming
Thursday June 5, 4:30 pm ET
By Jeannine Aversa, AP Economics Writer
Foreclosures surge to a record high -- late payments, too, signaling worse to come
WASHINGTON (AP) -- The foreclosure hammer is hitting ever harder. People lost their homes at the highest rate on record in the first three months of the year, and late payments soared to a new high, too -- an alarming sign that the housing crisis and its damage to the national economy may only get worse.
Dumping more empty homes on an already glutted market also is likely to put a further drag on home prices -- extending a vicious cycle.
Slumping home values are being blamed in large part for the rising tide of foreclosures. Troubled borrowers are left owing more to the bank than their homes are worth. They can't sell without taking a huge financial hit, so they just walk away.
In fact, Americans' equity in their homes -- usually their single biggest asset -- now has dropped to the lowest level on record in figures going back to the end of World War II. Homeowners' portion of equity fell to 46.2 percent, which means the amount of debt tied up in their homes exceeds the equity they have built up.
Watching their home values sink, consumers have pulled back on spending, a factor in the economy's slowdown. Buoyed by rebate checks, shoppers did get back in the buying groove in May, but analysts predict that consumers -- pounded by galloping gasoline prices -- will still be cautious.
"The economy is treading water, and the housing market is one of the undercurrents trying to pull it down," said Stuart Hoffman, chief economist at PNC Financial Services Group.
Nearly 1 percent, or roughly 447,723 loans, fell into foreclosure during the January-to-March period, the Mortgage Bankers Association said Thursday in its quarterly snapshot of the mortgage market. That surpassed the previous high of 0.83 percent over the last three months in 2007.
The report also found that more homeowners slipped behind on their monthly payments. The delinquency rate jumped to 6.35 percent -- or 2.87 million loans -- compared with 5.82 percent for the previous three months. Payments are considered delinquent if they are 30 or more days past due.
Both the rate of new foreclosures and late payments were the highest on record going back to 1979.
With prices expected to keep dropping, foreclosures and late payments "are going to continue to go up," Jay Brinkmann, the association's vice president of research and economics, told The Associated Press.
Homeowners with tarnished credit who have subprime adjustable-rate loans took the hardest hits. Foreclosures and late payments for these borrowers also swelled to all-time highs in the first quarter.
The percentage of subprime adjustable-rate mortgages that started the foreclosure process climbed to 6.35 percent. The rate was 5.29 percent in fourth quarter, the previous high. Late payments rose to 22.07 percent from 20.02 percent, the previous high.
The association's survey covers just over 45 million home loans.
More problems also cropped up with loans to more creditworthy borrowers.
The percentage of such loans falling into foreclosure was 0.54 percent, compared with 0.41 percent at the end of last year. Late payments rose to 3.71 percent from 3.24 percent.
The numbers were higher for those prime borrowers with adjustable rate mortgages. Initially low rates reset to much higher ones, making it difficult, if not impossible, for homeowners to keep up with monthly mortgage payments. The proportion of those loans falling into foreclosure jumped to 1.55 percent from 1.06 percent. The delinquency rate rose to 6.78 percent, compared with 5.51 percent.
"The number one problem is the drop in home prices," Brinkmann said. Declining prices, especially in newer built areas, "are hurting people's ability to recover when they run into trouble -- a divorce or loss of job," he said. "In other days, you could sell the home. But because home prices have fallen so much, in many of those cases, the homes are going into foreclosure."
California, Florida, Nevada and Arizona accounted for 89 percent of the total increase in new home foreclosures, he said. Those are places where prices have fallen sharply and there was a lot of home building, creating too much supply, Brinkmann said.
"These extra inventories from foreclosures complicate what is already a heavily built situation," said David Seiders, chief economist at the National Association of Home Builders.
After a five-year boom, the housing market fell into a deep slump two years ago. That dragged down sales, and prices with it. As the value of homes plummeted, many newer homeowners found themselves owing more on their mortgages than their homes were worth.
Nearly 8.5 million homeowners had negative or no equity in their homes at the end of March, representing more than 16 percent of all homeowners with mortgages, according to Mark Zandi, chief economist at Moody's Economy.com. He estimates that will increase to 12.2 million, or almost one out of every four homeowners, by the end of June.
Nearly three in 10 people say they are worried their home's value will decline over the next two years, according to a recent Associated Press-AOL Money & Finance Poll. Sixty percent said they definitely won't buy a home in the next two years. That's up from 53 percent two years ago.
As foreclosures and late payments climbed, financial companies took multibillion-dollar losses when their investments in mortgage-backed securities soured. A credit crisis spread, crimping other types of financing. The fallout plunged Wall Street in turmoil, disrupting the normal functioning of markets.
All those troubles have pushed the economy to the brink of a recession. Employers, cutting costs, have eliminated more than a quarter-million jobs in the first four months of this year.
To bolster the economy, the Federal Reserve made aggressive interest rate cuts. But with inflation on the rise, Fed Chairman Ben Bernanke this week sent his strongest signal yet that the central bank's rate-cutting campaign is coming to an end.
The Bush administration has urged lenders to freeze rates for some homeowners and encouraged lenders to rework mortgage terms so troubled borrowers can stay in their homes.
A congressional plan that includes a foreclosure prevention program has stalled as lawmakers figure out how to pay for it.
Associated Press Business Writer J.W. Elphinstone contributed to this report.
Mortgage Bankers Association: http://www.mbaa.org/
By Jeannine Aversa, AP Economics Writer
Foreclosures surge to a record high -- late payments, too, signaling worse to come
WASHINGTON (AP) -- The foreclosure hammer is hitting ever harder. People lost their homes at the highest rate on record in the first three months of the year, and late payments soared to a new high, too -- an alarming sign that the housing crisis and its damage to the national economy may only get worse.
Dumping more empty homes on an already glutted market also is likely to put a further drag on home prices -- extending a vicious cycle.
Slumping home values are being blamed in large part for the rising tide of foreclosures. Troubled borrowers are left owing more to the bank than their homes are worth. They can't sell without taking a huge financial hit, so they just walk away.
In fact, Americans' equity in their homes -- usually their single biggest asset -- now has dropped to the lowest level on record in figures going back to the end of World War II. Homeowners' portion of equity fell to 46.2 percent, which means the amount of debt tied up in their homes exceeds the equity they have built up.
Watching their home values sink, consumers have pulled back on spending, a factor in the economy's slowdown. Buoyed by rebate checks, shoppers did get back in the buying groove in May, but analysts predict that consumers -- pounded by galloping gasoline prices -- will still be cautious.
"The economy is treading water, and the housing market is one of the undercurrents trying to pull it down," said Stuart Hoffman, chief economist at PNC Financial Services Group.
Nearly 1 percent, or roughly 447,723 loans, fell into foreclosure during the January-to-March period, the Mortgage Bankers Association said Thursday in its quarterly snapshot of the mortgage market. That surpassed the previous high of 0.83 percent over the last three months in 2007.
The report also found that more homeowners slipped behind on their monthly payments. The delinquency rate jumped to 6.35 percent -- or 2.87 million loans -- compared with 5.82 percent for the previous three months. Payments are considered delinquent if they are 30 or more days past due.
Both the rate of new foreclosures and late payments were the highest on record going back to 1979.
With prices expected to keep dropping, foreclosures and late payments "are going to continue to go up," Jay Brinkmann, the association's vice president of research and economics, told The Associated Press.
Homeowners with tarnished credit who have subprime adjustable-rate loans took the hardest hits. Foreclosures and late payments for these borrowers also swelled to all-time highs in the first quarter.
The percentage of subprime adjustable-rate mortgages that started the foreclosure process climbed to 6.35 percent. The rate was 5.29 percent in fourth quarter, the previous high. Late payments rose to 22.07 percent from 20.02 percent, the previous high.
The association's survey covers just over 45 million home loans.
More problems also cropped up with loans to more creditworthy borrowers.
The percentage of such loans falling into foreclosure was 0.54 percent, compared with 0.41 percent at the end of last year. Late payments rose to 3.71 percent from 3.24 percent.
The numbers were higher for those prime borrowers with adjustable rate mortgages. Initially low rates reset to much higher ones, making it difficult, if not impossible, for homeowners to keep up with monthly mortgage payments. The proportion of those loans falling into foreclosure jumped to 1.55 percent from 1.06 percent. The delinquency rate rose to 6.78 percent, compared with 5.51 percent.
"The number one problem is the drop in home prices," Brinkmann said. Declining prices, especially in newer built areas, "are hurting people's ability to recover when they run into trouble -- a divorce or loss of job," he said. "In other days, you could sell the home. But because home prices have fallen so much, in many of those cases, the homes are going into foreclosure."
California, Florida, Nevada and Arizona accounted for 89 percent of the total increase in new home foreclosures, he said. Those are places where prices have fallen sharply and there was a lot of home building, creating too much supply, Brinkmann said.
"These extra inventories from foreclosures complicate what is already a heavily built situation," said David Seiders, chief economist at the National Association of Home Builders.
After a five-year boom, the housing market fell into a deep slump two years ago. That dragged down sales, and prices with it. As the value of homes plummeted, many newer homeowners found themselves owing more on their mortgages than their homes were worth.
Nearly 8.5 million homeowners had negative or no equity in their homes at the end of March, representing more than 16 percent of all homeowners with mortgages, according to Mark Zandi, chief economist at Moody's Economy.com. He estimates that will increase to 12.2 million, or almost one out of every four homeowners, by the end of June.
Nearly three in 10 people say they are worried their home's value will decline over the next two years, according to a recent Associated Press-AOL Money & Finance Poll. Sixty percent said they definitely won't buy a home in the next two years. That's up from 53 percent two years ago.
As foreclosures and late payments climbed, financial companies took multibillion-dollar losses when their investments in mortgage-backed securities soured. A credit crisis spread, crimping other types of financing. The fallout plunged Wall Street in turmoil, disrupting the normal functioning of markets.
All those troubles have pushed the economy to the brink of a recession. Employers, cutting costs, have eliminated more than a quarter-million jobs in the first four months of this year.
To bolster the economy, the Federal Reserve made aggressive interest rate cuts. But with inflation on the rise, Fed Chairman Ben Bernanke this week sent his strongest signal yet that the central bank's rate-cutting campaign is coming to an end.
The Bush administration has urged lenders to freeze rates for some homeowners and encouraged lenders to rework mortgage terms so troubled borrowers can stay in their homes.
A congressional plan that includes a foreclosure prevention program has stalled as lawmakers figure out how to pay for it.
Associated Press Business Writer J.W. Elphinstone contributed to this report.
Mortgage Bankers Association: http://www.mbaa.org/
Saturday, May 10, 2008
AP: Trade deficit narrows more than expected
The following appeared in the Saturday May 10, 2008 issue of the St. Paul Pioneer Press, Page 2C.
The U.S. trade deficit narrowed sharply in March as demand for imports ell by the largest amount since the last recession was ending. Analysts forecast that trade would continue to be one of the economy's few bright spots this year.
The March deficit totaled $58.2 billion, down 5.7 percent from February, the Commerce Department reported Friday. It was a much larger improvement than had been expected.
Imports totaled $206.7 billion in March, down $6.1 billion from the February level, a drop led by a 5.9 percent decrease in America's foreign oil bill.
Exports, which have been one of the few strong points in this period of weakness, dipped 1.7 percent in March to $148.5 billion, but that was still the second-highest level on record. For the first three months of this year, exports were up 17.6 percent over the same period a year ago.
The U.S. trade deficit narrowed sharply in March as demand for imports ell by the largest amount since the last recession was ending. Analysts forecast that trade would continue to be one of the economy's few bright spots this year.
The March deficit totaled $58.2 billion, down 5.7 percent from February, the Commerce Department reported Friday. It was a much larger improvement than had been expected.
Imports totaled $206.7 billion in March, down $6.1 billion from the February level, a drop led by a 5.9 percent decrease in America's foreign oil bill.
Exports, which have been one of the few strong points in this period of weakness, dipped 1.7 percent in March to $148.5 billion, but that was still the second-highest level on record. For the first three months of this year, exports were up 17.6 percent over the same period a year ago.
Sunday, May 4, 2008
Home prices keep sinking
The following article appeared on page 3C in the Wednesday April 30, 2008 St. Paul Pioneer Press.
Home prices keep sinking
Foreclosure filings double, hit record in first quarter
By J.W. Elphinstone
Associated Press
NEW YORK - In a bad omen for sellers and lenders this spring home-selling season, the erosion of house values is accelerating and foreclosure filings are doubling, new data showed Tuesday.
A closely watched index of home prices in 20 cities fell almost 13 percent in February from a year earlier, a record for the seven-year old S&P's/Case-Shiller Home Price index. The report follows news that foreclosure filings between January and March also hit a new high, and comes a day after the government said the number of vacant homes on the market also hit a record.
"Month-to-month, it gets consistently worse," said the index committee at S&P, noting February also marked the sixth-straight month all 20 cities experienced declines. "The slope is one direction. There is no sign of a bottom."
He said 17 of the metro areas the index tracks reported record annual declines, led again by Miami and Las Vegas.
Charlotte, N.C., was the only city to post an annual gain - 1.5 percent - but Blitzer noted Charlotte's positive returns continue to diminish with each month and it was the last city in the index to reach its peak.
Nevada posted the country's worst foreclosure rate in the first quarter, RealtyTrac Inc. said Tuesday, with one in every 54 households receiving a foreclosure-related notice.
Nationwide, one in every 194 households received a foreclosure filing during the quarter, more than double the same period last year.
The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity.
Home prices keep sinking
Foreclosure filings double, hit record in first quarter
By J.W. Elphinstone
Associated Press
NEW YORK - In a bad omen for sellers and lenders this spring home-selling season, the erosion of house values is accelerating and foreclosure filings are doubling, new data showed Tuesday.
A closely watched index of home prices in 20 cities fell almost 13 percent in February from a year earlier, a record for the seven-year old S&P's/Case-Shiller Home Price index. The report follows news that foreclosure filings between January and March also hit a new high, and comes a day after the government said the number of vacant homes on the market also hit a record.
"Month-to-month, it gets consistently worse," said the index committee at S&P, noting February also marked the sixth-straight month all 20 cities experienced declines. "The slope is one direction. There is no sign of a bottom."
He said 17 of the metro areas the index tracks reported record annual declines, led again by Miami and Las Vegas.
Charlotte, N.C., was the only city to post an annual gain - 1.5 percent - but Blitzer noted Charlotte's positive returns continue to diminish with each month and it was the last city in the index to reach its peak.
Nevada posted the country's worst foreclosure rate in the first quarter, RealtyTrac Inc. said Tuesday, with one in every 54 households receiving a foreclosure-related notice.
Nationwide, one in every 194 households received a foreclosure filing during the quarter, more than double the same period last year.
The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity.
Wednesday, April 30, 2008
AP: Fed cuts rates as economy slumps, hoping to stop recession
The following AP story appeared on Yahoo Finance at 7:41 p.m. on Wednesday April 30, 2008
By JEANNINE AVERSA, AP Economics Writer
WASHINGTON - Scrambling to shore up the faltering economy, the Federal Reserve cut interest rates to the lowest point in nearly four years Wednesday as the nation teetered on the edge of recession.
Wall Street rallied at first but then pulled back, concerned that the reduction might be the last for a while.
In fact, the Fed's trim was smaller than those of recent months amid indications the central bank might pause to see if months of powerful rate-cutting medicine and billions of dollars in stimulus checks will be enough to lift the country out of its slump.
Chairman Ben Bernanke led a divided Fed, in an 8-2 vote, in slicing its key rate by one-quarter percentage point to 2 percent.
In turn, the prime lending rate for millions of consumers and businesses fell by a corresponding amount, to 5 percent. The prime rate applies to certain credit cards, home equity lines of credit and other loans. Both rates are the lowest since late 2004.
The Federal Reserve, which has been dropping rates since last September, turned much more forceful early this year when housing, credit and financial problems worsened. Rate reductions in January and March alone marked the most aggressive intervention in a quarter-century in an effort to re-energize consumers and businesses.
"The substantial easing of monetary policy to date ... should help to promote moderate growth over time and to mitigate risks to economic activity," the Fed said, strongly hinting that more cuts may not be needed.
Enthusiastic Wall Street investors drove the Dow Jones industrial average up more than 178 points — lifting it above 13,000 for the first time since early January — right after the Fed action. Then traders' caution returned, and the index ended the day 11.81 points below where it started.
Although the Fed didn't take another reduction off the table, a growing number of economists believe the central bank is winding down its rate-cutting campaign. Barring another hit to economic growth, they believe rates probably will stay where they are — perhaps through the rest of this year — in part because the Federal Reserve is concerned that further cuts could join with galloping energy and food prices and spread inflation dangerously higher.
By all accounts, the country's economic health is fragile.
The economy crawled ahead at a pace of just 0.6 percent from January through March as housing and credit problems forced people and businesses to hunker down, the Commerce Department reported hours before the Fed's action. Growth had been just as feeble in the prior quarter.
Job losses for the first three months of the year neared the staggering quarter-million mark, and a government report on Friday is expected to show that employers shed jobs again in April. The unemployment rate, now at 5.1 percent, also could creep higher in April and hit 6 percent early next year, analysts say.
"Recent information indicates that economic activity remains weak," the Fed said. "Household and business spending has been subdued, and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters."
Two members — Charles Plosser, president of the Federal Reserve Bank of Philadelphia, and Richard Fisher, president of the Federal Reserve Bank of Dallas — opposed cutting rates Wednesday, a crack in the usually unified front the Fed often shows the public.
Both men have a reputation for being especially vigilant about fighting inflation. At the Fed's previous meeting in March, they opposed cutting rates by a whopping three-quarters point and preferred a smaller reduction.
"The Fed didn't completely shut the door on rate cuts but they closed it part way," said Mark Zandi, chief economist at Moody's Economy.com. "I think the overall message was they've done a lot already to help the economy and think this will be enough. But they stand ready to do more if that is needed."
Bernanke's juggling act is getting harder. Fed policymakers are trying to bolster economic growth, and at the same time they are mindful that they can't let inflation get out of hand. The very rate reductions the Fed depends on to energize the economy can also sow the seeds of inflation down the road.
At the same time, many economists believe the economy already is declining.
Under one rough rule, if the economy contracts for six straight months it is considered to be in recession. However, that didn't happen in the last recession — in 2001. A panel of experts at the National Bureau of Economic Research that determines when U.S. recessions begin and end uses a broader definition, taking into account income, employment and other barometers. The bureau's finding is usually made well after the fact.
The Fed's previous rate reductions, which take months to work their way through the economy, should help lift growth in the second half of this year. The government's $168 billion economic-stimulus package — including tax rebates that started flowing to bank accounts on Monday — also should help energize activity, the Bush administration, Bernanke and private economists have said.
The biggest weight on the economy is the housing crisis, which has pushed foreclosures to record highs and caused financial institutions to rack up billions of dollars in losses.
For mortgage rates, the Fed's latest cut probably won't have much, if any, impact.
Rates on longer-term 30-year and 15-year mortgages, which are linked to the 10-year Treasury notes, actually could see rates rise in the weeks ahead in part because of concerns about higher inflation. Rates on shorter-term mortgages probably won't drop either because investors already had factored in the latest Federal Reserve action.
Still, people with adjustable-rate home loans have been helped by the Fed's series of rate reductions; they would have been socked with much higher rates when their mortgages reset if not for the Federal Reserve cuts, analysts said. "Going forward, if the Fed holds rate steady, resets in the pipeline would benefit in a similar fashion as still-low interest rates would mean very manageable mortgage-rate resets," said Greg McBride, senior financial analyst at Bankrate.com.
By JEANNINE AVERSA, AP Economics Writer
WASHINGTON - Scrambling to shore up the faltering economy, the Federal Reserve cut interest rates to the lowest point in nearly four years Wednesday as the nation teetered on the edge of recession.
Wall Street rallied at first but then pulled back, concerned that the reduction might be the last for a while.
In fact, the Fed's trim was smaller than those of recent months amid indications the central bank might pause to see if months of powerful rate-cutting medicine and billions of dollars in stimulus checks will be enough to lift the country out of its slump.
Chairman Ben Bernanke led a divided Fed, in an 8-2 vote, in slicing its key rate by one-quarter percentage point to 2 percent.
In turn, the prime lending rate for millions of consumers and businesses fell by a corresponding amount, to 5 percent. The prime rate applies to certain credit cards, home equity lines of credit and other loans. Both rates are the lowest since late 2004.
The Federal Reserve, which has been dropping rates since last September, turned much more forceful early this year when housing, credit and financial problems worsened. Rate reductions in January and March alone marked the most aggressive intervention in a quarter-century in an effort to re-energize consumers and businesses.
"The substantial easing of monetary policy to date ... should help to promote moderate growth over time and to mitigate risks to economic activity," the Fed said, strongly hinting that more cuts may not be needed.
Enthusiastic Wall Street investors drove the Dow Jones industrial average up more than 178 points — lifting it above 13,000 for the first time since early January — right after the Fed action. Then traders' caution returned, and the index ended the day 11.81 points below where it started.
Although the Fed didn't take another reduction off the table, a growing number of economists believe the central bank is winding down its rate-cutting campaign. Barring another hit to economic growth, they believe rates probably will stay where they are — perhaps through the rest of this year — in part because the Federal Reserve is concerned that further cuts could join with galloping energy and food prices and spread inflation dangerously higher.
By all accounts, the country's economic health is fragile.
The economy crawled ahead at a pace of just 0.6 percent from January through March as housing and credit problems forced people and businesses to hunker down, the Commerce Department reported hours before the Fed's action. Growth had been just as feeble in the prior quarter.
Job losses for the first three months of the year neared the staggering quarter-million mark, and a government report on Friday is expected to show that employers shed jobs again in April. The unemployment rate, now at 5.1 percent, also could creep higher in April and hit 6 percent early next year, analysts say.
"Recent information indicates that economic activity remains weak," the Fed said. "Household and business spending has been subdued, and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters."
Two members — Charles Plosser, president of the Federal Reserve Bank of Philadelphia, and Richard Fisher, president of the Federal Reserve Bank of Dallas — opposed cutting rates Wednesday, a crack in the usually unified front the Fed often shows the public.
Both men have a reputation for being especially vigilant about fighting inflation. At the Fed's previous meeting in March, they opposed cutting rates by a whopping three-quarters point and preferred a smaller reduction.
"The Fed didn't completely shut the door on rate cuts but they closed it part way," said Mark Zandi, chief economist at Moody's Economy.com. "I think the overall message was they've done a lot already to help the economy and think this will be enough. But they stand ready to do more if that is needed."
Bernanke's juggling act is getting harder. Fed policymakers are trying to bolster economic growth, and at the same time they are mindful that they can't let inflation get out of hand. The very rate reductions the Fed depends on to energize the economy can also sow the seeds of inflation down the road.
At the same time, many economists believe the economy already is declining.
Under one rough rule, if the economy contracts for six straight months it is considered to be in recession. However, that didn't happen in the last recession — in 2001. A panel of experts at the National Bureau of Economic Research that determines when U.S. recessions begin and end uses a broader definition, taking into account income, employment and other barometers. The bureau's finding is usually made well after the fact.
The Fed's previous rate reductions, which take months to work their way through the economy, should help lift growth in the second half of this year. The government's $168 billion economic-stimulus package — including tax rebates that started flowing to bank accounts on Monday — also should help energize activity, the Bush administration, Bernanke and private economists have said.
The biggest weight on the economy is the housing crisis, which has pushed foreclosures to record highs and caused financial institutions to rack up billions of dollars in losses.
For mortgage rates, the Fed's latest cut probably won't have much, if any, impact.
Rates on longer-term 30-year and 15-year mortgages, which are linked to the 10-year Treasury notes, actually could see rates rise in the weeks ahead in part because of concerns about higher inflation. Rates on shorter-term mortgages probably won't drop either because investors already had factored in the latest Federal Reserve action.
Still, people with adjustable-rate home loans have been helped by the Fed's series of rate reductions; they would have been socked with much higher rates when their mortgages reset if not for the Federal Reserve cuts, analysts said. "Going forward, if the Fed holds rate steady, resets in the pipeline would benefit in a similar fashion as still-low interest rates would mean very manageable mortgage-rate resets," said Greg McBride, senior financial analyst at Bankrate.com.
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