Thursday PM January 24th, 2008
by: Ed Mayberry, January 24, 2008 5:01:00 am
President Bush is praising a bipartisan economic stimulus package that will give most tax filers refunds of $600 to $1,200. Some will get more if they have children. The president says the deal "has the right set of policies and is the right size.'' According to a Democratic survey, the rebates will go to 117 million families. An analysis by Congress' joint tax committee says more than 70 percent of the rebates will go to individuals who pay taxes. Rebates would go to people earning below a certain income cap. House Speaker Nancy Pelosi says Congress will act on the agreement quickly so that rebate checks can be put in the mail. Aides say the rebates, expected to go out in June, will cost about $100 billion. The deal comes after intense negotiations between Pelosi, Republican Leader John Boehner and Treasury Secretary Henry Paulson. A Senate panel has scheduled a meeting for next week to discuss the economic stimulus package. Montana Democratic Senator Max Baucus says he and the Senate Finance Committee's senior Republican have agreed to work quickly and mark up economic stimulus legislation next week.
Congress is continuing efforts to get help for struggling homeowners into the economic stimulus package being hammered out by Congress. Democratic Congressman Barney Frank says White House and Democratic negotiators are near agreement on an overhaul of the Federal Housing Administration. If successful, that would make it easier for homeowners with ballooning interest rates to refinance into federally insured loans. Also in the works is a one-year expansion of the maximum value of mortgages that Fannie Mae and Freddie Mac can buy and bundle to sell to investors. That would apply only to mortgages in regions where housing prices are highest, such as in California and cities in the northeast. Republicans are resisting expanding the role of Fannie and Freddie without stronger government oversight. The companies are recovering from accounting scandals of a few years ago and recently reported steep losses on mortgage-related investments.
A real estate group says sales of previously-owned homes fell again in December, capping a year when sales fell by the largest amount in 25 years. In addition, the National Association of Realtors says median home prices dropped over the course of the year for the first time in decades. For the entire year, home sales dropped 13 percent, the biggest decline since 1982. The median price for a single-family home dropped 1.8 percent to $217,000. That is the first annual price decline on records dating back to 1968. Realtors' Chief Economist Lawrence Yun says it is likely that the nation hasn't seen such a decline since the great depression of the 1930s. The group says sales of single-family homes and condos fell 2.2 percent in December to a rate of nearly 4.9 million.
Terrorism and its effect on the global economy are being discussed at the World Economic Forum in Switzerland, with leaders from Afghanistan, Pakistan and Iraq weighing in on the subject. Pakistani President Pervez Musharraf said illiteracy and poverty are a breeding ground for terrorism. He pledged to battle the "scourge'' of radicalism in regions bordering Afghanistan. Afghan President Hamid Karzai told the group that the whole world could suffer from the "wildfire'' of terrorism engulfing his region. Iraq's Deputy Prime Minister says his country will need U.S. help for "some time to come'' to act against "regional predators.'' Former Vice President Al Gore and U2 singer Bono praised efforts to tackle climate change and global poverty. But the two warned that conditions aren't improving as much as they could. And the head of Royal Dutch Shell says at the World Forum that conditions must improve before the company could resume production that was cut because of unrest in Nigeria.
A federal judge in Houston has delayed next week's retrial of two former Merrill Lynch executives--who want the case dismissed. Their 2004 fraud and conspiracy convictions connected to an Enron deal were overturned. Jury selection was set for Monday in the retrial of Daniel Bayly and Robert S. Furst. But the judge delayed the trial after Bayly, Furst and a third executive set for retrial later filed an appeal with the 5th U.S. Circuit Court of Appeals. The three were convicted of conspiracy and wire fraud for helping push through Enron's sham sale of power barges off Nigeria. The deal was struck to bolster the earnings of Enron's energy division. The 5th Circuit in 2006 threw out their convictions after finding fault with the government's erroneous fraud theory known as "honest services.''
The head of Lone Star Funds left South Korea after extensive grilling by South Korean prosecutors over Lone Star's activities in the country. Lone Star Chairman John Grayken says South Korea's supreme prosecutors' office questioned him for ten days. The subject was his Dallas-based private equity firm's 2003 purchase of Korea Exchange Bank and the acquisition a short time later of KEB's credit card unit. Grayken voluntarily came to South Korea on January 9th to testify in the trial of Lone Star's South Korean chief for alleged stock price manipulation. Two days later, Grayken told reporters that prosecutors had barred him from leaving the country. Prosecutors at the time would only say they wanted to question him. They said last night that they plan to question Grayken further at an unspecified time. Lone Star has come under intense scrutiny in South Korea over its business activities amid local unease over the role of foreign investors in the economy.