By Daniel Politi
The Washington Post, New York Times, USA Today, and the Wall Street Journal‘s world-wide newsbox all lead with President Obama’s new plan to help as many as 9 million struggling homeowners stay in their homes by helping them refinance their mortgages or prevent foreclosure. The WP calls it “the largest federal foreclosure-prevention package in decades.” The plan could cost as much as $275 billion, of which $75 billion will go to help up to 4 million homeowners prevent foreclosure; the rest will go toward doubling the government’s financial backing of mortgage giants Fannie Mae and Freddie Mac to $400 billion. Many of the plan’s details won’t be released until early March, but everyone notes that it “was more ambitious and expensive than many housing analysts had expected,” as the NYT puts it. Still, many cautioned that it won’t end the foreclosure crisis, and millions of homeowners won’t be eligible to receive help.
The Los Angeles Times off-leads Obama’s announcement and leads locally with the continuing fight over California’s budget. After state senators “spent a second frustrating day locked inside the Capitol,” it looks like a deal could finally be in the making that would give Democrats and the governor the one Republican vote they need to pass the spending plan that includes more than $14 billion in tax increases.
The plan announced by Obama yesterday essentially helps two types of homeowners. It would help as many as 5 million people who have a mortgage guaranteed by Fannie Mae or Freddie Mac and are current on their payments but don’t have enough equity in their homes to refinance to take advantage of lower interest rates. The administration hopes that by giving $200 billion more in financial backing to Fannie Mae and Freddie Mac, it can broadly increase the amount of credit that is available. But a vast majority of homeowners who are “underwater,” those who owe more on their mortgages than their homes are worth, won’t qualify. Homeowners will only be able to refinance if their mortgages are no more than 5 percent above the current market value.
The centerpiece of the plan was the $75 billion that will be devoted to helping ailing homeowners avoid foreclosure by bringing mortgage payments down to 31 percent of monthly income. The idea is that if a lender agrees to reduce mortgage payments so they make up no more than 38 percent of monthly income, the government would share the cost to bring that down to 31 percent. Lenders would receive direct financial incentives to participate, a fact that has led some to criticize the plan because foreclosures are expensive, so lenders should usually want to avoid them, anyway. “They don’t need the extra gravy from a government handout,” one expert tells the Post. In order to further encourage lenders to avoid foreclosures, Obama also said he would push Congress to give bankruptcy judges the power to modify mortgages.
The WSJ points out the program doesn’t do anything to try to increase demand for housing. The focus will be on helping owners stay in their homes and not investors, which, as the Post notes, is “a politically understandable position but one that ignores the fact that investors accounted for as much as 40 percent of home sales during the peak of the housing bubble.” In a front-page analysis, the LAT says that while the plan involves “strategies that attack the complex problems on several fronts,” many still have doubts “about whether the initiative will be bold enough and swift enough to succeed.”
The WP is alone in moving to Page One the questions surrounding Sen. Roland Burris and his continually changing story about his contacts with former Gov. Rod Blagojevich’s aides before he was appointed to Obama’s old Senate seat. Burris “thought he was crowning his pioneering career with a position at the political pinnacle” but now “finds himself fighting to save both his job and his reputation,” notes the Post. Inside, the LAT says that while Burris may have had some trouble gaining admittance into the Senate, “he will not be easily expelled” now that he’s part of the club. It’s incredibly rare for senators to formally get rid of one of their own. In fact, the last ones to suffer that fate were accused of supporting the rebels during the Civil War. But considering he’s such a new member who arrived under questionable circumstances, some think he might start to feel an incredible amount of pressure to resign.
The NYT and WSJ front news that UBS has agreed to release the names of American account-holders as part of a $780 billion settlement with prosecutors after Switzerland’s largest bank admitted that it actively helped customers hide money from the IRS. It is not clear how many names UBS will reveal, but the WSJ says it will be around 250. The mere fact that UBS has agreed to release names is big news as it breaks with Switzerland’s long-standing tradition of secrecy in the nation’s banking system. “The Swiss are saying that this is the end of Swiss banking as they knew it,” an offshore tax specialist tells the NYT. “Nobody will trust the security of the Swiss bank account.” Prosecutors suspect UBS helped American clients hide around $20 billion from U.S. authorities and threatened the bank and its executives with indictments if they refused to cooperate.
The WP off-leads newly released documents that show that in 1964, “J. Edgar Hoover’s FBI found itself quietly consumed with the vexing question” of whether Jack Valenti was gay. Valenti, who died two years ago and was head of the Motion Picture Association of America from 1966 until 2004, was a top aide to President Lyndon Johnson in 1964, when Hoover’s staff tried to determine whether he had a relationship with a male photographer. At first Johnson didn’t want the FBI to investigate the issue, but he then relented to pressure and allowed it to go forward. It’s no secret that Hoover’s FBI constantly looked into claims of “homosexual activity,” which, at the time, could destroy a Washington career, but the obsession with Valenti seems to have been particularly intense. And, just in case this whole thing isn’t weird enough, the Post reports that Bill Moyers, the man who is now known as a staunchly liberal television personality but was then a White House aide, apparently sought “information on the sexual preferences of White House staff members.” Moyers says he doesn’t really remember what that was all about.
The NYT reports that Gov. Kathleen Sebelius of Kansas is “the leading candidate” to become the next secretary of health and human services. White House officials caution nothing has been decided yet but say she would be a particularly strong choice because of her record of being able to work across party lines as a Democrat in a Republican state.
Regular Slate readers might be interested to know that it looks like Phillip Carter, who has contributed dozens of articles to Slate over the years, might be named deputy assistant secretary of defense for detainee affairs, according to the Post.
The LAT takes a look at how Hollywood is struggling to find the right balance between glamour and sensitivity to the current state of the economy for this Sunday’s Oscars. Some things are obvious. Parties are being scaled back, and no one is clamoring to wear diamond-encrusted shoes. “It used to be chic to say, ‘I’m wearing $16 million worth of jewels,’ ” a publicist said. “That’s distasteful right now.” But some say there’s a risk of going too far into recession mode and warn that if movie stars try too hard to appear sympathetic to the economic woes of millions of Americans, no one will want to watch. “Would you really want to tune in and see a bunch of women walking down the red carpet in black pantsuits?” the fashion director of InStyle magazine said. “It’s a recession, not an apocalypse.”