Early Briefing: Skepticism on Aid for Fannie, Freddie

*Some lawmakers expressed doubts about the wisdom of the federal government's plan to prop up mortgage finance giants Fannie Mae and Freddie Mac, with one Republican senator complaining it was tantamount to writing a "blank check" to save the troubled companies.

The often-outspoken Sen. Jim Bunning (R-Ky.) railed against the plan during a hearing before the Senate Banking Committee. "When I picked up my newspaper yesterday, I thought I woke up in France. But, no, it turned out it was socialism here in the United States and very -- going well," he said, raising his voice. "The Treasury secretary is now asking for a blank check to buy as much Fannie and Freddie debt, or equity, as he wants." He said he would do "do everything I can to stop it."

Many in the Senate expect lawmakers to move on the legislation soon. But the banking panel's ranking Republican, Sen. Richard C. Shelby (Ala.) expressed reservations and is said to be contemplating changes. House Majority Leader Steny H. Hoyer (D-Md.) raised the prospect of holding hearings first before taking up the measure next week.


*In the four years since he stepped down as Fannie Mae's chief executive under the shadow of a $6.3 billion accounting scandal, Franklin D. Raines has been quietly constructing a new life for himself. He has shaved eight points off his golf handicap, taken a corner office in Steve Case's D.C. conglomeration of finance, entertainment and health care companies and more recently, taken calls from the Obama campaign seeking his advice on mortgage and housing policy matters.

And he's privately smoldered over the events of the past week, when Fannie Mae and Freddie Mac were portrayed as being on the brink of disaster, prompting steep drops in their stocks and a federal intervention.

In his first interview in two years, Raines remains insistent that the mortgage finance giant's problems are not rooted in the company but stem from a time when the Bush administration and the Fed insisted the government-sponsored enterprise carried no explicit federal backing.

*Ron Wright spent three years searching for the right locale to open the high-end cigar store and cocktail lounge he had dreamed of before he finally renovated a worn Florida Avenue rowhouse in Northeast Washington.

The location, on the southern edge of Trinidad's crime-addled scarred streets, seemed risky. But Wright had a unique perspective on the area, and he saw hope where many did not. For the past four years, he has patrolled the area as a D.C. police lieutenant.


A former colleague of Wright's, Master Patrol Officer Clarence "C.J." Jackson, chose an equally troubled area in which to invest his money and off-duty hours.Later this month, he plans to open an IHOP in the Congress Heights area of Southeast.

In mirror endeavors, the two officers are investing in the neighborhoods they have sworn to protect, at a time when the city's development boom is bringing major changes to the streets they patrol. In starting their own businesses, they are expanding the traditional notion of moonlighting police officers moonlighting as security guards, looking both to maintain the gains the neighborhoods have made and to profit from them.

*Montgomery County residents who employ nannies, housekeepers or cooks for at least 20 hours a week would be required to offer workers a written contract that spells out job conditions such as wages and benefits, under legislation passed yesterday that county officials said might be the first of its kind in the nation.

*CapitalSource, a commercial lender based in Chevy Chase, said its wholly owned subsidiary, CapitalSource Healthcare REIT, will file an initial public offering to raise at least $300 million. The new company will be managed by CapitalSource, which will continue to own the majority of CapitalSource Healthcare REIT's stock. CapitalSource Healthcare REIT will invest in healthcare-related businesses such as nursing homes and acute care facilities.

*Capital One Financial's profit estimate was cut by Piper Jaffray analyst Robert Napoli, who said rising consumer loan defaults may not peak until 2010. The McLean firm will be hurt because the "stubborn credit crunch" and rising gas prices will push consumers to default on loans or reduce spending, Napoli said in a research note.
Capital One may earn $4.80 a share in 2008 and $5.05 a share in 2009, he said, down from $4.96 and $5.14, respectively.

*>Comstock Homebuilding of Reston said it received a notice from the Nasdaq Stock Market last week that it was going to be delisted. It has requested a hearing to appeal. Comstock said it was first told of its lack of compliance with market rules Jan. 9.

By Terri Rupar  |  July 16, 2008; 5:00 AM ET  | Category:  Morning Brief
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