Early Briefing: Is The Takeover Working?
For signs of just how difficult it is for the government to rescue the economy, one need look no further than Treasury's takeover of Fannie Mae and Freddie Mac.
In the nearly two months since the government seized control of the mortgage finance giants, little progress has been made to ease mortgage credit.
Backed by taxpayers, the mortgage finance giants have spent billions in an attempt to push down loan rates and make it easier for people to borrow money to buy homes. But mortgage rates have gone up.
The Treasury Department has also started buying $10 billion in mortgage bonds issued by the companies, with the ultimate goal of ensuring that mortgage lenders have a ready stream of money to lend. But the effort has been offset by a global sell-off of these bonds.
And even though Fannie Mae, of the District, and Freddie Mac, of McLean, have taken steps to help thousands of people avoid foreclosure, some housing advocates say the companies are not doing enough to help others keep their homes.
Federal Deposit Insurance Corp. Chairman Sheila C. Bair has urged the companies and their regulator to be more aggressive in helping people avoid foreclosure, according to people familiar with the matter.
See the rest of staff writer Zachary A. Goldfarb's update here.
In other news:
*The economic meltdown claims another government initiative.
The D.C. Council member who created a plan to provide health care to thousands of uninsured residents said Tuesday he wants to delay it to help the District create a $20 million cash reserve in the face of continued economic uncertainty.
David A. Catania (I-At Large), who sponsored the Healthy DC proposal that the council approved last spring, said he will formally ask his colleagues to postpone the program for at least a year.
Instead, Catania said the cash reserve is necessary to prepare for a likely continued decline in revenue, which could swell the rolls of residents who seek health care under the D.C. Healthcare Alliance, a safety net for low-income residents.
Catania has been critical of revenue estimates made by D.C. Chief Financial Officer Natwar M. Gandhi, who announced last month that the city faced a $131 million revenue shortfall for 2009. Although Mayor Adrian M. Fenty (D) has proposed closing the gap through a combination of spending cuts, including eliminating hundreds of vacant jobs and using special revenue that has accrued in the accounts of city agencies, Catania said he expects the fiscal crisis to worsen.
In other news:
*Gannett said it will cut another 10 percent from the workforce at the local newspapers it owns around the country by early December. The latest reductions follow a 10 percent cut announced in August.
*Volkswagen of America, which relocated its headquarters from suburban Detroit to Herndon this year, has swiftly moved to establish its corporate brand in Washington.
The maker of the VW Beetle Tuesday announced a three-year, multi-million dollar sponsorship deal with the NBA Washington Wizards and Verizon Center.
The Wizards/Verizon transaction includes the display of six vehicles in the arena concourse, and high-profile signage throughout the interior and exterior of the facility, including on the scoreboard, according to a Wizards spokesman. The agreement also includes promotions during the game, season tickets and luxury seating.
The Wizards agreement follows a five-year, $14 million deal that VW, based in Germany, signed earlier this year to be the primary sponsor of D.C. United's soccer team.
About 400 VW employees, including a few hundred highly paid executives, have been moving into auto company's 185,000-square-foot headquarters in Herndon. The number of employees could increase if VW reaches its goal of tripling U.S. auto sales to 1 million a year by 2018.
VW was in the news for other reasons as well. It briefly was the world's most valuable company.
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