Fannie Mae and Freddie Mac Continue to Struggle
In the year since the government stepped in to rescue the collapsing mortgage giants Fannie Mae and Freddie Mac, the agencies have taken $96 billion from the Treasury, and may still need more.
That was the somber assessment delivered Thursday by the federal agency charged with overseeing the government-controlled Fannie and Freddie, which have lost a combined $165 billion since July 2007 as their bets on the housing market went bad.
“The short-term outlook for the enterprises remains troubled,” said Edward J. DeMarco, acting director of the Federal Housing Finance Agency, in testimony before the Senate Banking Committee.
Fannie Mae and Freddie Mac, the Federal National Mortgage Association and Federal Loan Mortgage Corp., respectively, which bought millions of home mortgages, were taken over by the government in September 2008 after their share prices plummeted and investors abandoned the companies, fearing they would collapse under the weight of their loan portfolios. The government put Fannie and Freddie into a conservatorship and offered billions in federal lifelines.
Democrats Are Considering Additional Tax on Insurers
Speaker Nancy Pelosi said Thursday that House Democrats were considering a “windfall profits tax” on insurance companies to help pay for legislation that would provide coverage to most of the uninsured.
The idea, she said, is to capture some of the profits that insurance companies might reap if the government required nearly everyone to have insurance and subsidized premiums for millions of low- and middle-income people.
Pelosi’s comments came as Senate Democrats said they were increasingly confident about passing health legislation in the face of staunch Republican opposition. The Senate Finance Committee plans to vote Tuesday on its version of the legislation.
The Senate Democratic leader, Harry Reid of Nevada, said the effort to pass a bill had gained momentum from a report Wednesday by the Congressional Budget Office. The report said that a bill drafted by the Finance Committee would provide coverage to 29 million people, but reduce deficits over the next decade because the costs would be offset by new taxes and fees and cutbacks in Medicare. Sen. Blanche Lincoln of Arkansas, a centrist Democrat who had expressed concern about the potential cost of the bill, said the report had shored up her support for it.
“It’s real positive,” Lincoln said. “You know, we all set goals and we really, really, really worked hard to stay within those goals of making sure that it was deficit-neutral, and we even got a higher score of deficit reduction in there.”
The budget office said the Finance Committee bill would reduce deficits by $81 billion in the next 10 years and by much more in the following decade. Senate Republicans were sputtering with frustration at the report from the budget office, which they said gave an overly rosy picture of the bill.
Fed Is Split on How and When To Begin Raising Rates
Fissures are developing among policymakers at the Federal Reserve as they debate how and when to start raising the benchmark interest rate from its current level just above zero.
With Fed officials forecasting that unemployment will average 9.8 percent in 2010, nobody appears to be arguing that monetary policy should be tightened anytime soon. The central bank’s official mantra continues to be that the overnight federal funds rate will remain “exceptionally low” for “an extended period.”
But Fed officials have hinted at new disagreement in recent weeks.
The arguments go beyond the traditional split between hawks, who worry that easy money stokes inflation, and doves, who contend that unemployment is the top problem.
Beyond raising the overnight federal funds rate, the Fed also has to unwind $2 trillion in programs that prop up paralyzed banks and credit markets.
Susceptible to Swine Flu But Skipping Inoculations
The age group most likely to become infected with swine flu — students from elementary and high school — is the group that did the worst in having seasonal flu shots last year, according to data released Thursday by federal health officials.
Only about 21 percent of children ages 5 to 17 received flu shots last year, according to the Centers for Disease Control and Prevention, compared with 41 percent of infants, 32 percent of adults at risk of complications and 67 percent of the elderly.
But that is expected to change this year, said Gary L. Euler, the centers epidemiologist who prepared the report.
The data came from a telephone survey of 414,000 households.
Last year was the first in which that federal officials had recommended that everyone ages 5 to 17 receive flu shots, and that recommendation was made only after doctors had ordered their fall shipments of flu shots, so vaccine ran short.
“Also, over the years, it takes a while for vaccination rates to increase,” Euler said.
This year, with worries about swine flu, preliminary data from insurance companies suggests that many more Americans are asking for flu shots, he added.
“We’re three weeks ahead of schedule,” Euler said, meaning that as many people had shots by the end of September as would have by the third week of October in a normal year.