Bernanke hints at more interest rate cuts; Bank of America is in talks to buy Countrywide.

Bernanke hints at more interest rate cuts; Bank of America is in talks to buy Countrywide.

Bernanke hints at more interest rate cuts; Bank of America is in talks to buy Countrywide.

A summary of what's in the major U.S. newspapers.
Jan. 11 2008 6:05 AM

The Director's Cuts

The New York Timesleads with Federal Reserve Chairman Ben Bernanke hinting that the Fed will, once again, be cutting interest rates soon. In his first speech of the year, Bernanke recognized the troubles that lie ahead for the U.S. economy and said the Fed is ready to take "substantive additional actions," which was interpreted to mean that the short-term interest rate will be cut by half a percentage point at the end of the month. The Los Angeles Timesleads, and the Wall Street Journal goes across its front page, with news that Bank of America is currently in negotiations to buy Countrywide Financial, the biggest mortgage lender in the country, which has seen its stock drop 88 percent in the past year. Countrywide's shares soared 51 percent yesterday when news of the negotiations became public. A takeover by Bank of America would prevent Countrywide from collapsing and causing a huge dent in the U.S. economy. It would be a risky move for Bank of America, but also one that could bring huge financial rewards, assuming the housing market recovers.

The Washington Postleads with President Bush saying that Palestinian refugees and their descendents should be compensated for the homes they left behind. After he became the first U.S. president to visit the West Bank city of Ramallah, Bush also declared that it is time for Israel to "end the occupation that began in 1967." USA Todayleads with word that only $1 billion of the $4.5 billion in federal money approved for reconstruction of the Gulf Coast has been spent. It's "a sign that key pieces of the region's recovery effort are languishing in red tape," says the paper. The WSJ leads its world-wide newsbox with Sen. John Kerry's endorsement of Barack Obama.

Advertisement

Besides reducing the short-term interest rate to 3.75 percent at the end of January, most analysts think the central bank is ready to keep on cutting throughout the year to ease the effects of an economic downturn. Although the Fed had previously said it was just as worried about inflation as a slowdown in the economy, Bernanke's comments yesterday made it clear that he is ready to focus on economic growth and leave fears about rising prices on the sidelines for now. "The outlook for real activity in 2008 has worsened," Bernanke said in a speech that was also seen as a call on lawmakers to pass legislation that would stimulate the economy. Although Bernanke was careful to emphasize that the Fed "is not currently forecasting a recession," new economic data have led many to see a sustained downturn in the economy as almost inevitable.

After two days of meetings with Israelis and Palestinians, Bush said he's still confident a treaty can be reached before the end of his term. But in order to do this he emphasized that both sides must reach a compromise that reflects "current realities." By championing compensation he implied that he rejects the Palestinian claim of the refugees' "right of return" to Israel. The plan was short on details, and despite the story's top placement in the WP, the paper makes clear that the statements were "a careful reformulation of established positions." Although it marked the first time that Bush has publicly supported the idea of compensation, it was a key part of the Clinton administration's position and, as all the papers point out, it has long been recognized as a key feature of any future agreement.

Everyone notes that Kerry's endorsement was particularly symbolic because he was the one that pushed to have Obama deliver the keynote address at the 2004 Democratic convention, which pushed him into the national spotlight. Of course, it was also a "slap," as the NYT puts it, at John Edwards, but it was no big surprise since everyone knows there isn't much love between the two politicians after their failed bid for the White House. The endorsement was months in the making, and was announced at an important time when Obama wants to show he has the support of key Democrats. A political strategist tells the LAT that Kerry, Al Gore, and Sen. Edward Kennedy are the three heavyweight Democrats that all the candidates want on their side.

Speaking of endorsements, the NYT reefers an interview with Rep. James Clyburn of South Carolina, who says he's currently considering going back on his pledge to stay neutral in his state's primary due to the disappointment he feels with statements that Clinton made about the civil rights movement. Clyburn, the highest-ranking African-American in Congress, is taking particular aim at Clinton saying that "Dr. King's dream began to be realized when President Lyndon Johnson passed the Civil Rights Act of 1964." Clyburn also said he is frustrated with former President Clinton, "who described Mr. Obama's campaign narrative as a fairy tale," says the NYT. But wait a minute, TP always thought that when Clinton talked about a "fairy tale" (video is available here) he was referring to the positive press coverage that Obama has been receiving.

The NYT fronts a look at how the "political chattering class" is getting tired of the way New York Mayor Michael Bloomberg keeps on refusing to give a straight answer on whether he will launch an independent bid for the White House. Some are remembering the hype that led up to Fred Thompson's candidacy and are running out of patience for this kind of will-he-or-won't-he game, while others simply want him to shut up and concentrate on his current job. But aides seem to believe that all the increased exposure (which, hey, now includes a front-page piece in the NYT!) only helps Bloomberg.

The WP goes inside with the Pentagon acknowledging that they don't know whether what seemed like a radio threat to bomb U.S. warships last week was actually made by the approaching Iranian speedboats. The threats came through a commonly used frequency, and Farsi speakers say the accent didn't sound Iranian. The Pentagon insists they never actually claimed the Iranians made the threats but when heard "simultaneously to the behavior of those boats, it only adds to the tension," a spokesman said.

The LAT and WP front, and everyone mentions, news that Sir Edmund Hillary has died. Hillary, a beekeeper from New Zealand, gained worldwide fame in 1953 when he and his Sherpa guide, Tenzing Norgay, became the first to climb Mount Everest. He was 88.

USAT fronts, and the WP goes inside with, the funny-if-it-weren't-so-outrageous news that telecommunications companies have cut off some FBI wiretaps of suspected terrorists and criminals because the bureau didn't pay its phone bills. A report by the Justice Department's inspector general reviewed almost 1,000 bills and found that more than half were not paid on time. "It sounds as though the telecoms believe it when the FBI says the warrant is in the mail, but not when they say the check is in the mail," said an ACLU staffer.

Daniel Politi has been contributing to Slate since 2004 and wrote the Today’s Papers column from 2006 to 2009. Follow him on Twitter.