USA Todayleads with a look at how the $410 billion omnibus spending bill contains $227 million for pet projects requested by lawmakers who aren’t even in Congress anymore. The New York Timesand Washington Postlead with the Obama administration announcing the details of its program to rescue millions of struggling homeowners. The White House said it hopes the two-part plan will help as many as one in nine homeowners. The program received favorable reviews from several large lenders, but others insist it won’t do enough to end the ongoing foreclosure crisis.
The Los Angeles Timesleads with growing concern among lawmakers and interest groups that President Obama is naming too many policy czars, who could undermine congressional authority and concentrate too much power in the White House. The Wall Street Journalleads its world-wide newsbox, and the LAT off-leads, with the Supreme Court declaring that drug makers can still be sued in state court by injured patients even if federal regulators approved the product. The 6-3 ruling could affect many other industries besides prescription drugs and marked a major blow to businesses that have long argued federal rules should protect them from lawsuits at the state level. In 2006, the Bush administration, which often sided with businesses on this issue, reversed a Food and Drug Administration policy and declared that federal approval of a drug “preempts” lawsuits at the state level.
The budget that will keep the government running through September has faced lots of criticism for containing more than $7 billion in earmarks. USAT points out that the bill even includes 459 projects that were requested solely by former lawmakers, including seven projects worth $1.2 million for Rick Renzi, a former Republican congressman who is facing corruption charges. Former Sen. Larry Craig of Idaho, who was arrested in 2007, is also getting $1 million for his pet projects. The White House has called the bill “last year’s business” and says the president will be cracking down on the practice in the future.
The NYT says the program detailed by the White House yesterday is “the most ambitious effort since the 1930s to help troubled homeowners.” As was already known, the program has two main components. The main one is a $75 billion program that could help as many as 4 million people avoid foreclosure by offering financial incentives to lenders in order to modify mortgages so that monthly payments don’t make up more than 31 percent of a borrower’s income. Homeowners can qualify as long as they live in the property and their loan isn’t higher than $729,750 for a single-family home. Several large banks said they would participate, but the NYT points out that their “eagerness” will almost certainly be affected by the fate of a bill currently making its way through Congress that would give bankruptcy judges the power to modify troubled mortgages.
The second part of the program will help homeowners with little or no home equity refinance mortgages held or owned by Freddie Mac or Fannie Mae. Homeowners of any income can qualify to get lower rates, but they cannot owe more than 105 percent of the current value of their home. The government expects as many as 5 million homeowners to benefit. While the focus has always been on owner-occupied homes, Fannie Mae and Freddie Mac said they would refinance some second homes as well. Although the administration said that homeowners could begin to apply for the program right away, the WP points out lenders were overwhelmed with calls yesterday, and many said it could take several weeks to set everything up.
The Treasury Department also announced that it will issue a new plan in the coming weeks to help borrowers with second mortgages, which were often used as “piggy back” loans. Although few details were released, it seems the administration will try to convince the holders of these second mortgages to forgive those debts. The WSJ specifies that around half of delinquent subprime borrowers have second mortgages, and that has often prevented them from modifying their loans.
The program doesn’t require lenders to reduce the principal of what homeowners owe, which is one of the main reasons why some remain skeptical. In the NYT’s op-ed page, John Geanakoplos and Susan Koniak warn that we’ll soon be faced with an “avalanche of foreclosures,” and the White House plan “wastes taxpayer money and won’t fix the problem.” The best thing to do would be to reduce the principal “far enough so that each homeowner will have equity in his house and thus an incentive to pay and not default again down the line.” This would help not only homeowners but also bondholders who would get more out of it than if the property went into foreclosure. Throwing money at mortgage servicers to encourage them to reduce interest payments is simply “a bad use of scarce federal dollars.”
The idea of a policy czar isn’t new, but the LAT says no president “has embraced the concept … to the extent that Obama has.” So far he has appointed these “super aides” to direct policy from inside the White House on a number of issues, including health care, the economy, and energy, and more are expected. Presidential scholars say that these czars often get frustrated because they have no clear authority. Because their focus frequently overlaps with several agencies, they can end up clashing with officials throughout the administration. Some lawmakers have also said they’re worried these advisers aren’t subject to congressional oversight. “They rarely testify before congressional committees and often shield the information and decision-making process behind the assertion of executive privilege,” Sen. Robert Byrd of West Virginia wrote in a letter to Obama last week.
The LAT and WP front the International Criminal Court issuing an arrest warrant for Sudanese President Omar Hassan al-Bashir on charges that he played an “essential role” in committing atrocities in Darfur. The court charged Bashir on seven counts of war crimes and crimes against humanity. The Sudanese government reacted quickly to the news and expelled at least 10 foreign aid groups that the WP says “handle 60 percent of humanitarian assistance in Darfur.” Many are concerned that the court’s actions could spark renewed violence and result in more suffering in Darfur.
In the WP’s op-ed page, Merrill McPeak and Kurt Bassuener argue that it’s time for the Obama administration to step up and work with allies to establish a no-fly zone in Darfur. “Bashir has strung the international community along in a way that the late Serbian leader Slobodan Milosevic would have envied,” they write. Although some have opposed the move to establish a no-fly zone, it’s the best way to “get enough leverage with Khartoum to negotiate the entry of a stronger U.N. ground force,” and “reducing Bashir’s options” could also make diplomacy more effective.
In a front-page dispatch from China, the NYT’s Edward Wong writes about how the Chinese government is so worried about violence once again breaking out in the country’s Tibetan regions that it has ordered “the largest troop deployment since the Sichuan earthquake last spring.” Wong “got a rare look” at the deployment when he was recently driven through some of these areas “while being detained by the police for 20 hours” without explanation. The Tibetan regions have now become “militarized zones,” where soldiers are seemingly everywhere, and a curfew has been imposed in Lhasa, the Tibetan capital. The Chinese government insists that there are no real problems in Tibet, but the extent of the deployments shows how it “remains one of the most sensitive political and security issues for China, though one that remains invisible in the developed cities along the country’s east coast.”
The NYT’sfront page and the WP’s Style section bothtake a look at how Obama’s hair is going grayer a mere six weeks after arriving in the White House. It’s a little strange act of coordination considering they both acknowledge this isn’t really a new thing. Obama talked about going grayer during the campaign when there was even some speculation he might be dyeing it to look more distinguished. Both papers get assurances from Zariff, Obama’s barber of 16 years, that the president’s hair “is 100 percent natural.” Well, that’s a relief.