- - Wednesday, January 19, 2011

FDIC

Bair: Foreclosure commission needed

The mortgage-servicing industry should fund a new commission to compensate homeowners who may have wrongly been kicked out of their homes, a top U.S. banking regulator said Wednesday.

Federal Deposit Insurance Corp. Chairman Sheila Bair said this claims commission could be modeled on those created to compensate victims of the BP oil spill and the Sept. 11, 2001, terrorist attacks. She said the size of such a claims fund would have to be negotiated.

The biggest U.S. mortgage servicers, including Bank of America, Wells Fargo and JPMorgan Chase & Co., have been accused of taking possibly illegal shortcuts in some foreclosure proceedings, such as using “robo-signers” to sign hundreds of unread documents a day and advancing foreclosures without proof they held the mortgages.

The allegations have been a reputational and financial hit for the companies. They are facing repurchase demands from investors in mortgage-backed securities and multiple probes from bank regulators and all 50 state attorneys general.

The attorneys general have already been negotiating with the big banks to set up such a nationwide fund for wrongful foreclosures.

ALABAMA

Bentley apologizes for recent remarks

MONTGOMERY | Alabama Gov. Robert Bentley is apologizing for his remarks about only Christians being his brothers and sisters.

Mr. Bentley said Wednesday he didn’t mean to insult anyone with the comments he made at a church in Montgomery after his inaugural address on Monday. He says no one should hate anyone else because of color or religion.

Mr. Bentley spoke with reporters after meeting with several members of Alabama’s Jewish community and other faith leaders at his Capitol office.

AFL-CIO

Trumka: Spend more to spur growth

Politicians are too obsessed with budget cuts when they actually should spend more on public works projects that would create jobs, the head of the nation’s largest union federation said Wednesday.

AFL-CIO President Richard Trumka said the rush to trim federal and state budgets was shortsighted, would hurt middle-class workers and do little to spur economic growth.

“Too many of our politicians are doing the opposite of what works,” Mr. Trumka said in a speech at the National Press Club. “Destroying our public institutions, crushing working people’s rights and living standards and failing to invest in education. We know this model, and we know where it leads catastrophe.”

Unions face growing hostility from Republican-led state legislatures, and unionized public employees are trying to fend off cuts to salaries, pensions and other benefits.

Mr. Trumka also offered a subtle challenge to President Obama, who has worked to mend ties with business.

He accused Washington politicians of living in “an Alice-in-Wonderland political climate” where the wealthy get tax cuts but “we cannot fund the basic functions of government, let alone invest to build the infrastructure of the future.”

HOUSE

Hearing to probe financial bailouts

The House’s major investigative committee will explore financial bailouts and the foreclosure crisis on Jan. 26, in the panel’s initial hearing this year.

Rep. Darrell Issa, chairman of the Oversight and Government Reform Committee, invited Special Inspector General Neil Barofsky and Treasury Secretary Timothy F. Geithner to testify.

Mr. Barofsky has investigated failures in the government’s financial-bailout program and problems with the Obama administration’s Home Affordable Mortgage Program to alleviate foreclosures.

The inspector general’s next quarterly report is to be released the day of the hearing. It was not immediately clear whether Mr. Geithner will testify or send subordinates.

Mr. Issa, California Republican, said the bailout program began under a Republican administration and now operates under a Democratic president.

He said, “It’s a fitting subject for bipartisan oversight.”

HOUSING

2010 ends bad construction year

Homebuilders are coming off their two worst years in more than a half-century, and the outlook for this year is only slightly better.

Economists say it could take three more years before the industry begins building homes at a healthy rate. In the meantime, the housing downturn is dragging on the broader economy, with one-quarter of the jobs lost since the recession began in the construction field.

Builders normally help lead the economy out of a recession. Construction projects fuel growth, and that leads to more hiring.

But a year and a half after the recession officially ended, builders are struggling to compete in markets flooded with unsold homes many of them foreclosures that are depressing prices.

“Housing in the past has always been one of the key drivers getting the economy back on track. It is not going to happen this time, because there is a huge glut of homes out there,” said Patrick Newport, U.S. economist at IHS Global Insight.

Homebuilders broke ground on a total of 587,600 homes in 2010, just slightly better than the 554,000 started in 2009, the Commerce Department reported Wednesday. Those are the lowest annual totals on records dating back to 1959.

WISCONSIN

Ex-Sen. Feingold inks book deal

MILWAUKEE | Former U.S. Sen. Russ Feingold has a new book deal in place.

The Wisconsin Democrat is writing a book about the nation’s role in international affairs. It will be called “While America Sleeps.”

Specifically, he plans to write about what America has done wrong domestically and overseas since the Sept. 11, 2001, terrorist attacks. He also plans to outline his strategy for what the nation needs to do to remain focused on its top international threats.

The book is scheduled for release early next year.

Mr. Feingold served three terms in the U.S. Senate. He ran for a fourth term, but was defeated by Republican businessman Ron Johnson in November.

Mr. Feingold will also teach an advanced law course at Marquette University in the spring.

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