Shares of mortgage giants continue to fall as the government debates whether to intervene.

Shares of mortgage giants continue to fall as the government debates whether to intervene.

Shares of mortgage giants continue to fall as the government debates whether to intervene.

A summary of what's in the major U.S. newspapers.
July 11 2008 6:21 AM

The Falling Giants

The New York Timesand Washington Postlead, while the Wall Street Journal tops its business news box, with the continuing financial troubles at Fannie Mae and Freddie Mac that are increasing fears among investors that the government will have to step in to rescue the companies. Shares of the two government-sponsored mortgage giants continued to plummet yesterday as many predict the companies will be forced to raise more capital by issuing additional shares. The WSJ notes shares for both companies are down more than 80 percent from last year. The NYT highlights that the Bush administration is considering whether the government should take over one or both companies, which would make their shares essentially worthless and would mean taxpayers would have to foot the bill for any losses on mortgages they own or guarantee.

The Los Angeles Timesleads with a government report that reveals the number of immigrants who were born in Mexico and became U.S. citizens increased by nearly 50 percent last year. The report cited the media campaign in Spanish-language outlets encouraging immigrants to apply for citizenship, along with a general desire to avoid being hit by a fee increase, as important reasons for this increase. In total, the number of people who filed for citizenship doubled to 1.4 million in 2007. USA Today leads with a look at how Americans living abroad are likely to face problems if they want to vote in the November elections. Several states are holding late primaries, which will delay the mailing of absentee ballots, and there hasn't been much progress in expanding electronic voting due to privacy concerns. "It's going to be a harder year for our soldiers and military personnel and others who are overseas," Minnesota's secretary of state said.

Advertisement

If there's one thing everyone can agree on, it's that it's highly unlikely that the government would allow Fannie Mae and Freddie Mac to fail. The NYT puts this in the starkest terms by noting that if the mortgage giants are unable to borrow money ("their lifeblood for buying mortgages"), it would effectively freeze the U.S. housing market and could lead to widespread damage in economies around the world. Still, the WSJ makes clear that a government takeover would be "an extreme situation," and there are other things that could be done to help investors gain confidence in the companies, including a long-term loan from the Federal Reserve. The government could also explicitly state that it stands behind the companies, which is what most assume now anyway. But, as the NYT notes, offering "an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies … would effectively double the size of the public debt." Some, however, are decidedly more optimistic and say current fears are overblown.

Sen. John McCain was quick to say that Fannie and Freddie "will not fail, we will not allow them to fail." But, as the WP off-leads, McCain had to deal with problems of his own on the economic front. After spending the week trying to convince voters that he understands their pain during the current downturn, he got no help from one of his top economic advisers, who said that the country is only in a "mental recession." In an interview, former Sen. Phil Gramm of Texas said the United States had become a "nation of whiners." Though the presumptive nominee was quick to say he doesn't agree with Gramm, it marked yet another obstacle for the candidate, who has been struggling to get away from comments in which he admitted that the economy is not his strong suit.

At one point McCain was asked whether Gramm might become treasury secretary in his administration. "I think Senator Gramm would be in serious consideration for ambassador to Belarus," McCain answered, "although I'm not sure the citizens of Minsk would welcome that."

Away from the issues of the day on the campaign trail, the LAT fronts a decidedly unflattering look at McCain's divorce from his first wife and how it caused a permanent rift in his relationship with the Reagans. McCain has said that he had already separated from his first wife, Carol Shepp, before he began dating Cindy Hensley. But court documents reveal that he was supposedly living with his wife "for the first nine months of his relationship with Hensley," the LAT notes. The paper goes on to point out that despite McCain's suggestions that months passed between his divorce and remarriage, the truth is that he married Hensley five weeks after the divorce became official. When McCain filed for divorce, it came as a shock to those the couple was close to, including the Reagans, who didn't even realize they were having problems. Meanwhile, some of McCain's friends thought he was already separated. McCain doesn't talk much about that part of his past, but in his autobiography he wrote that the "marriage's collapse was attributable to my own selfishness and immaturity."

Advertisement

The WP fronts word that the White House has decided not to do anything about greenhouse-gas emissions before President Bush leaves office. Despite the fact that the Supreme Court ordered the Environmental Protection Agency to decide whether greenhouse gases are a hazard and senior federal officials believe it's time to act, the administration is essentially going back to square one. The EPA will announce today that it is reopening the period for comments on the threats posed by global warming, even though the vast majority of experts have already moved beyond such a basic question. Some senior officials in the White House have used all sorts of maneuvers to prevent the EPA from stating that global warming harms humans because it would automatically translate into more regulations. "They argued that this increase in regulation should be on the next president's record," said one person who participated in the discussions.

In a local scandal-in-the-making, the NYT reveals on Page One that Rep. Charles Rangel, the powerful New York lawmaker, enjoys the use of four rent-controlled apartments. Landlords have been criticized for aggressively trying to evict tenants in rent-stabilized apartments, and it's unclear how Rangel got four—one of which he uses as a campaign office—to begin with when they're only supposed to be used as a primary residence.

The LAT and WP front news that the chief prosecutor of the International Criminal Court will ask for an arrest warrant on Monday for the president of Sudan on charges of genocide and crimes against humanity. If judges issue the warrant, it will mark the first time that the international court in The Hague charges a sitting president with genocide. Some U.N. officials and aid workers are concerned the move could lead the Sudanese government to retaliate against the peacekeepers and aid workers. In an analysis piece inside, the NYT notes that although indicting "a sitting head of state in a war-torn country would not be unprecedented," Sudan is so volatile that it has raised questions about whether it even makes sense to investigate war crimes right now.

In other news from the presidential campaign, the NYT notes that neither candidate has done a good job of keeping his list of top bundlers up to date, even though they've long been critics of the role money plays in politics. When the NYT contacted Obama about it, his campaign scrambled to update its list and added 181 names. McCain's campaign said its list would be updated "in the next week or so." Meanwhile, Obama's once-formidable fundraising operation appears to be having some trouble. Of course, it could just be a summer lull, but the WSJ notes that Obama's June total is likely to be around $30 million, which the paper describes as "an underwhelming haul." For his part, McCain raised $22 million in June, a record for his campaign. The Post notes that Obama's campaign seems to recognize that it needs to expand its efforts with big donors if it hopes to reach the goal of raising more than $450 million by November.

Clinton donors are essential to Obama's stepped-up fundraising efforts, but those who might have been looking for signs that Obama cares about helping the former first lady pay off her campaign debt were certainly not reassured on Wednesday night. The LAT notes that Obama forgot to mention the debt in his speech. After walking offstage, he seems to have realized his oversight and went back a minute later. "Sen. Clinton still has some debt," he said as the audience laughed. "That is part of the process of making sure that we're unified. … All right, turn on the music again. Let's keep on partying."

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