“We won’t see a real turnaround until the core problem housing reaches a bottom stabilizes and turns the corner,” he said at the Detroit Economic Club.
Lewis said immediate short-term actions by the government and the private sector to save homeowners and get the foreclosure crisis under control was needed to “get out of this mess.”
Lewis spoke in Detroit where the economy has been hit hard by some of the highest foreclosure rates in the nation and a deepening crisis sweeping through the Big Three automakers.
The chief executives of General Motors Corp (GM. N). Ford Motor Co (F. N) and Chrysler LLC (CBS. UL) were set to take their case for a $25 billion bailout to the U. S. Congress later Tuesday. They say a financial rescue is imperative if the industry is to survive the escalating liquidity crisis.
Blaming the housing crisis on government subsidies and excessively low interest rates. Lewis said the mortgage industry needs a “realistic” view of the ability of customers to handle rising payments and rethink its view on short-term low-interest “teaser” rates.
Mortgage lenders should also retain a portion of originated loans on their own balance sheets and keep servicing responsibilities to the extent possible he added.
Bank of America became the nation’s largest mortgage lender and servicer when it paid $2.5 billion for Countrywide Financial Corp in July “The economy is under a lot of stress … and the industry that has formed the backbone of your economy for a century is in crisis,” Lewis said of Michigan.
In October. Cuomo’s office asked nine banks to turn over information on bonuses. He wants to ensure none of the $125 billion the banks received from the government’s Troubled Asset Relief Program will be used on executive pay.
WASHINGTON – Jarred by new jobless alarms. Congress raced to approve legislation Thursday to keep unemployment checks flowing through the December holidays and into the new year for a million or more laid-off Americans whose benefits are running out.
The economic picture was only getting worse if Wall Street was any indication. The Dow Jones industrials dropped more than 400 points for a second straight day reaching the lowest level in more than five years and the Standard & Poor’s 500 index fell below lows established six years ago.
The Senate’s vote followed Thursday’s government report that laid-off workers’ new claims for jobless aid had reached a 16-year high and the number of Americans searching for work had surged past 10 million.
The White House which had opposed broader legislation containing the benefits extension urged passage of the new version and said President George W. Bush would quickly sign it.
As Congress prepared to leave town — perhaps for the year — there was no such resolution on helping the auto industry a disaster in the making that could lead to hundreds of thousands if not millions of additional lost jobs. Democratic leaders said they could return to Washington in mid-December to vote on rescue loans if the carmakers first present a plan on transforming and modernizing their operations.
As for the jobless benefits about 1.2 million people would exhaust their unemployment insurance by the end of the year without the extension sponsors said. The measure is estimated to cost about $5.7 billion although economists put the positive impact at $1.64 for every dollar spent on jobless benefits because the money helps sustain other jobs and restores consumer confidence.
“Putting money in the hands of unemployed families means they will be able to pay their rent and utility bills buy groceries and clothe their children,” Sen. Dick Durbin. D-Ill. said after the voice vote in the Senate. “It is money that will create economic growth in America.”
Thursday’s Labor Department report said claims for unemployment benefits jumped last week to 542,000 the highest level since July 1992 and fresh evidence of a rapidly weakening job market that is expected to get even worse next year.
The legislation as approved would provide seven additional weeks of payments to people who have exhausted their benefits or will exhaust them soon. Those in states where the unemployment rate is above 6 percent would be entitled to an additional 13 weeks above the 26 weeks of regular benefits. Benefit checks average about $300 a week nationwide.
The vote could wrap up this session of Congress — with the possibility of the December return. The Democratic leaders’ main condition for that special session was that the Big Three automakers first present a plan showing how federal aid would help them modernize.
“Until we can see a plan where the auto industry is held accountable,” said House Speaker Nancy Pelosi. “we cannot show them the money.”
“We are prepared to come back into session the week of Dec. 8 to help the auto industry,” Senate Majority Leader Harry Reid said. “But only if they present a responsible plan that gives us a realistic chance to get the needed votes.”
Congressional Democrats had sought to move legislation that would direct $25 billion from the $700 billion financial rescue plan to the automakers to ensure they can stay in business until the spring. They abandoned those plans this week in the face of resistance from the White House and Senate Republicans.
The broader economic questions of what further actions Washington must take to avoid more home foreclosures and rectify staggered financial markets will probably have to wait until January when the new Democratic-dominated Congress will convene and Barack Obama will be in the White House. An economy-stimulating package that could run into the hundreds of billions of dollars is likely to be on the agenda when the next Congress opens.
Treasury Secretary Henry Paulson said Thursday that the financial crisis now plaguing the world economy is something that happens “once or twice” in 100 years.
The need to address the deteriorating job situation was one area that everyone could agree. “The recent financial and credit crisis has slowed the economy and it’s having an impact on job creation,” White House press secretary Dana Perino said in urging Congress to pass the benefits extension.
Congress has enacted federally funded extensions seven times in the past 50 years during economic slumps — in 1958. 1961. 1972. 1975. 1982. 1991 and 2002.
Unemployment insurance is a joint program between states and the federal government that is almost completely funded by employer taxes either state or federal.
Before Thursday’s quick resolution the White House had threatened to veto a broader. $61 billion stimulus bill that would have helped states maintain Medicaid benefits and extend funds for public works projects in addition to the extending the jobless benefits.
In yet another bad sign for the economy’s near future the private. New York-based Conference Board said Thursday that its monthly forecast of economic activity declined 0.8 percent in October. Over the past seven months the index has declined at a 4.7 percent annual rate faster than at any other time since 2001.
    NEW YORK – Wall Street put a stop to a terrifying decline and stormed higher Friday as President-elect Barack Obama appeared ready to tap the chief of the New York Federal Reserve as the next treasury secretary and hand him the herculean task of righting the U. S financial system.
    The Dow Jones industrial average which had broken even for the day until news of the nomination leaked about an hour before the close raced upward and finished 494 points higher a rally of more than 6 1/2 percent.
    The outbreak of buying pushed the Dow above 8,000 — a figure that would have seemed like a nightmare three months ago but on Friday was a relief for Americans who have watched their investments and retirement savings drain away with alarming speed.
In the two previous days the Dow had lost a staggering 873 points more than 10 percent of its value and the broader Standard & Poor’s 500 index had sunk to its lowest level since 1997.
    The turnaround came when word reached Wall Street that Obama was likely to nominate New York Fed president Timothy Geithner. 47 for treasury secretary. Geithner would assume top responsibility for tackling what threatens to be the deepest recession in a generation.
    Financial markets despise uncertainty and investors were looking for a clear message from Obama on who will make up his economic brain trust. Wall Street had been voicing increasing frustration with Henry Paulson the current treasury secretary over his erratic handling of the federal financial rescue system.
    “Something needed to be done on the economy,” said Ben Halliburton chief investment officer at Tradition Capital Management. “The fact that they’ve got the team together maybe that is going to shorten the period of indecision.”
    Elsewhere the government continued its efforts to shore up the financial system. The Federal Deposit Insurance Corp also said it would guarantee up to $1.4 trillion in U. S bank debt for more than three years as part of the government’s financial rescue plan.
    The decision is aimed at breaking the logjam of bank-to-bank lending. The health of the economy depends on the free flow of credit and credit markets cinched up again as the market plunged earlier this week.
    The benchmark Standard & Poor’s 500 index jumped 47.59 or 6.32 percent to 800.03 and the Nasdaq composite advanced 68.23 or 5.18 percent to 1,384.35.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange where consolidated volume came to 9.27 billion shares up from the 8.96 billion shares that exchanged hands on Thursday. This makes Friday’s volume the heaviest since the 11.20 billion seen on Oct. 10.
    The Friday afternoon rally managed to prevent the week from being one of the few most dismal in Wall Street history. Corporate mainstays running the gamut from Gap Inc to Alcoa Inc and Walt Disney Co to Microsoft Corp surged by double-digit amounts.
    But it did not erase heavy losses for the week. The Dow finished down about 5 percent for the five days and other major averages suffered too — 8 percent for the S&P 500 nearly 9 percent for the Nasdaq.
    But the S&P is still down 46 percent so far this year the most since 1931. And there was still plenty to be concerned about. Citigroup stock took another huge hit — down 20 percent of what’s left of its value to close at $3.77 — as pressure built on the bank to sell part or all of itself.
    With the economic bad news piling up. President George W. Bush signed an extension of jobless benefits that will make sure millions of laid-off workers keep getting their unemployment checks as the holidays approach. Congress had approved the bill Thursday and rushed it to the president before he took a flight to Peru for an economic summit.
    Geithner worked at the Treasury Department for 13 years leaving in 2001. People close to him say he is motivated by difficult challenges. Justin Rudelson a friend of Geithner’s from Dartmouth College said he asked Geithner in June whether he was getting enough sleep.
    While a Geithner appointment could remove the cloud of uncertainty surrounding Obama’s economic team has been removed there are still plenty of unknowns facing the market.
    As a result volatility will remain a major force on Wall Street for some time to come said Jack Ablin chief investment officer at Harris Private Bank in Chicago. He said worries about marquee companies from General Motors to Citigroup are unnerving investors.
    “What we’re seeing is these symbols of American business history really suffering and prompting investors to call into question the viability of the system,” Ablin said referring to the functioning of the broader economy.
    Investors have also worried about the fate of the Detroit Three automakers which are perilously low on cash and asking Washington for more help. But lawmakers have likely put off a vote on whether to extend a lifeline until next month and have asked the automakers for detailed plans about how they would use the money. The prospect of a bankruptcy filing by one or more of the companies has added to Wall Street’s worries about the state of the economy.
    Bond prices fell Friday as credit markets eased somewhat following a freeze-up Thursday. The yield on the benchmark 10-year Treasury note which moves opposite its price jumped to 3.20 percent from 3.00 percent late Thursday. The yield on the three-month T-bill considered one of the safest investments rose to 0.04 percent from 0.01 percent late Thursday.
    Light sweet crude for January delivery rose 51 cents to settle at $49.93 a barrel on the New York Mercantile Exchange. The dollar fell against other major currencies while gold prices rose.
    Overseas. Japan’s Nikkei stock average jumped 2.70 percent. In European trading. Britain’s FTSE 100 fell 2.43 percent while Germany’s DAX index fell 2.20 percent and France’s CAC-40 fell 3.33 percent. …
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