Small Business Owners Key in Payroll Tax Cut Debate

President Obama and Senate Democrats are on a full offensive to get Republicans to agree to extend the payroll tax deduction before it expires at the end of the year, while a new plan to carve out a bigger break for small businesses is taking center stage. Two senators have offered a possible bipartisan compromise that they hope could end the standoff.

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Watchdog Urges Mandatory Mortgage Principal Reductions

The watchdog appointed by lawmakers to oversee the effectiveness of the government’s bailout programs again urged the U.S. Treasury to make either discretionary or mandatory a program to rescue borrowers from foreclosure through mortgage principal reductions. Currently, the alternative program is voluntary, leaving the decision up to the mortgage servicer.

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Bailout Programs Failing to Spark Small Business Lending

Bank bailout programs have failed to generate needed credit to small businesses and prospects are not good, according to the May report by the Congressional Oversight Panel, the watchdog over the U.S. Treasury’s $700 billion Troubled Asset Relief Program. In addition, the panel is casting doubt on the Obama Administration’s much heralded $30 billion TARP re-allocation intended to ultimately assist small businesses.

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Geithner Rejects Claim of an ‘Unsustainable Recovery’

U.S. Treasury Secretary Timothy Geithner said today that the U.S. economy is growing and the private sector is adding jobs, although the “enormous amount of damage” already done will likely keep the unemployment rate near its current level. In an interview with Bloomberg TV, Geithner dismissed Republican arguments that the recovery is “unsustainable” because much of the job growth is government generated, some of it through temporary hiring for the U.S. Census.

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Principal Writedowns New Option in Foreclosure Rescues

In a move long sought by critics of the government’s foreclosure prevention program, U.S. Treasury officials today said principal writedowns to 115 percent of loan-to-value will be offered as an alternative mortgage modification. In addition, the Obama Administration announced a new program to help unemployed homeowners. They will be offered temporary forbearance for a minimum of 3 months, and up to six months for some borrowers.

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Debt Writedown Key to Obama’s New Foreclosure-Fix Phase

A greater emphasis on principal writedowns or limited forgiveness will mark new changes to the government’s much-criticized foreclosure prevention program in coming weeks as realization sets in that interest rate reductions and term extensions are not enough. One plan with some debt forgiveness will establish a new and easier “standard” for short sales, a Treasury official said today. Another new program will significantly reduce or temporarily eliminate mortgage payments for unemployed homeowners.

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Repubs Blast Obama’s Foreclosure Fix as ‘Spin Over Substance’

The two most vocal Republican critics of President Obama’s foreclosure prevention program told U.S. Treasury Secretary Timothy Geithner in a letter that its mortgage modification reports were overstating results, shifting its initially stated goal and applying “spin over substance.” Rep. Darrell Issa, R-California, ranking member of the Oversight and Government Reform Committee, and Rep. Jim Jordan, R-Ohio, ranking member of the Domestic Policy Subcommittee, wrote the letter to Geithner, dated March 16, 2010.

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Dodd: Consumer Watchdog to have ‘Autonomous’ Rule Authority

A new consumer protection ‘bureau” with sweeping authority over credit cards, mortgages and other financial products will be housed within the Federal Reserve but retain a degree of autonomy, according a new outline of financial system overhaul unveiled today. The historic reform would also create a separate systemic-risk council with the power to dismantle an institution deemed to pose a threat to the U.S. economy, “but only as a last resort.”

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HAMP: Foreclosure Help Rate Nudges to 29% of Eligible

The government’s primary foreclosure rescue program has permanently reduced the mortgage payments of more than 170,000 borrowers through February, the U.S. Treasury reported today. But the percentage of those eligible homeowners who are either in the trial phase or approved for permanent status nudged just one point to 29 percent, compared to 28 percent in January and 25 percent in December.

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