Archive for January, 2009

Obama pushes economic plan; cloud over health pick (Reuters)

Saturday, January 31st, 2009 | Finance News

WASHINGTON (Reuters) –
U.S. President Barack Obama sought to rally support for his emerging economic rescue package on Saturday, as he stood by his latest cabinet nominee to run into tax problems that could impede confirmation.

Obama, in his second weekly radio address since taking office, pledged to help lower Americans' mortgage costs under a new plan to be unveiled soon to help revive the financial system and "get credit flowing again."

But even as he moved to confront the economic crisis, Obama was facing a new political distraction -- the disclosure that Tom Daschle, picked to spearhead U.S. health care reform, failed to pay more than $128,000 in taxes.

It was the latest glitch in Obama's effort to complete his cabinet and focus on top priorities, including a mid-February target for Congress to pass an economic stimulus bill with more than $800 billion in tax cuts and spending.

Treasury Secretary Timothy Geithner's nomination was held up earlier by criticism over late payment of $34,000 in taxes.

The White House said Obama expected Daschle, a former Senate Democratic majority leader and one of his key early supporters, to be confirmed by the Senate as secretary of Health and Human Services.

"The president has confidence that Senator Daschle is the right person to lead the fight for health care reform," Obama's press secretary, Robert Gibbs, said when the news broke. The White House reiterated that position on Saturday.

Obama has made accountability a key thrust of his approach since his election on a platform vowing sweeping change in the way Washington operates.

Daschle recently filed amended tax returns to pay back taxes, interest and penalties involving unreported consulting income, charitable contributions and use of a car service provided by a prominent businessman and Democratic donor.

Republicans could use Daschle's tax troubles to try to slow his confirmation, given that filling the job to reform health care is not considered as urgent as was getting a new Treasury chief in place to lead economic policymaking.


With the recession and financial crisis topping his agenda, Obama urged the Senate to approve the stimulus bill that the House of Representatives passed this week.

But as conditions worsen, the president said new strategies were in the works.

"Soon my treasury secretary, Tim Geithner, will announce a new strategy for reviving our financial system that gets credit flowing to businesses and families," Obama said.

"We'll help lower mortgage costs and extend loans to small businesses so they can create jobs."

Obama did not give specifics about the plan but said he would work with both parties to ensure a strong stimulus bill.

Republicans say they oppose the package largely because of spending priorities. Senate Republican leader Mitch McConnell said the bill passed along party lines in the Democratic-led House "looks more like a $1 trillion Christmas list."

Obama might be able to soften that resistance if he adds Republican Senator Judd Gregg to his cabinet as commerce secretary.

Gregg, a fiscal conservative from New Hampshire, emerged on Saturday as the top candidate, with an administration official saying a decision could come as early as Monday.

New Hampshire's Democratic governor, John Lynch, could then name a Democrat to replace Gregg, giving the 60 seats needed in the 100-seat Senate to overcome Republican procedural hurdles and allow Obama a clearer path for key legislation.

Daschle's tax woes are expected to cast a shadow next week. A Senate Finance Committee meeting has been called for Monday to discuss pending nominations, an aide said.

Senator Charles Grassley of Iowa, ranking Republican on the committee, wants committee members to weigh "all the facts of a nominee's record," a spokeswoman said.

"Some members might get tired of what they see as a pattern" among Obama's nominees a congressional aide said.

But Senator John Kerry, a Democrat on the Finance Committee, said Daschle had taken "all necessary steps to correct his innocent error" and called for his "speedy confirmation."

(Editing by John O'Callaghan)


Obama readies road map for new bailout spending (AP)

Saturday, January 31st, 2009 | Finance News

WASHINGTON – President Barack Obama on Saturday promised to lower mortgage costs, offer job-creating loans for small businesses, get credit flowing and rein in free-spending executives as he readies a new road map for spending billions from the second installment of the financial rescue plan.

The White House is deciding how to structure the remaining half of the $700 billion that Congress approved last year to save financial institutions and lenders. An announcement was possible as early as this coming week on an approach that would use a range of tools to unfreeze credit, helping families and businesses.

At the end of a week that saw hundreds of thousands of people lose their jobs, Obama also used his Saturday radio and Internet address to tell that nation that "no one bill, no matter how comprehensive, can cure what ails our economy."

During the final three months of 2008, the economy recorded its worst downhill slide in a quarter-century, stumbling backward at a 3.8 percent pace, the government reported Friday. It could get worse.

Treasury Secretary Timothy Geithner is trying to finish a plan to overhaul the bailout program begun in the Bush administration. Geithner has said the administration is considering using a government-run "bad bank" to buy up financial institutions' bad assets. But some officials now say that option is gone because of potential costs.

Many ideas under consideration could end up costing hundreds of billions beyond the original price tag. Aides would not rule out the possibility that the administration would seek more than the $350 billion already set aside.

Obama said Geithner soon would announce a new strategy "for reviving our financial system that gets credit flowing to businesses and families. We'll help lower mortgage costs and extend loans to small businesses so they can create jobs. We'll ensure that CEOs are not draining funds that should be advancing our recovery."

He said his administration "will insist on unprecedented transparency, rigorous oversight and clear accountability so taxpayers know how their money is being spent and whether it is achieving results."

Obama's message, largely repackaged from a week of White House statements, was as much for the country as it was for lawmakers: Pass the separate American Recovery and Reinvestment Plan or things are going to get worse.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., planned to discuss Obama's legislative agenda during a White House visit Monday evening, an administration official said.

"Rarely in history has our country faced economic problems as devastating as this crisis," the president said. "Now is the time for those of us in Washington to live up to our responsibilities."

Obama this past week won passage of a separate $825 billion economic stimulus plan in the House without a single Republican vote. It now heads to the Senate, where Vice President Joe Biden predicts the measure will fare better among GOP lawmakers.

Republicans pledged to work with Obama. But they cautioned against treating government spending like a "trillion-dollar Christmas list" and renewed their opposition to much in the bill.

"A problem that started on Wall Street is reaching deeper and deeper into Main Street. And the president is counting on members of Congress to come together in a spirit of bipartisanship to act," Senate Minority Leader Mitch McConnell, R-Ky., said in the GOP radio address. "Unfortunately, the plan that Democrats in Congress put forward this week falls far short of the president's vision for a bill that creates jobs and puts us on a path to long-term economic health."

Obama has signaled his willingness to compromise. His chief spokesman said the president hoped to "strengthen" the bill as it headed toward a Senate vote in the week ahead.

Republicans said they hope the administration takes into account their wishes.

"Every day brings more news of layoffs, home foreclosures and shuttered businesses," McConnell said. "And across the country, employers are cutting to the bone even at businesses that most Americans never thought were vulnerable."

Republicans, however, kept putting forward their own plans. McConnell promoted a mortgage program for creditworthy borrowers, offering fixed-rate 4 percent loans designed to increase housing demands and lending.


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BP investors concerned about new chairman plan: report (Reuters)

Saturday, January 31st, 2009 | Finance News

LONDON (Reuters) –
BP (BP.L) chairman Peter Sutherland has agreed to extend his tenure into the autumn amid growing shareholder disquiet over the company's choice of successor, the Financial Times reported on Saturday.

The newspaper cited a top-10 shareholder who said investors had become disillusioned with BP's choice of successor, Paul Skinner, chairman of Rio Tinto (RIO.L) (RIO.AX) after difficulties at the miner.

Other shareholders still back Skinner, the FT said.

A BP spokesman said no decision had been made yet on a replacement for Sutherland. The Chairman said last year he expected to stand down around the time of the company's AGM in April.

(Reporting by Tom Bergin; editing by James Jukwey)