Treasury is considering a new plan to lower interest rates for newly issued mortgages.

Treasury is considering a new plan to lower interest rates for newly issued mortgages.

Treasury is considering a new plan to lower interest rates for newly issued mortgages.

A summary of what's in the major U.S. newspapers.
Dec. 4 2008 6:32 AM

Pushing Homebuyers To Take the Plunge

The Washington Postdevotes its top nonlocal spot to, and the Wall Street Journalfronts, word that the Treasury Department is considering a new plan that would lower interest rates on newly issued mortgages in an effort to revitalize the housing market. The Treasury would offer to buy securities that back up these new mortgages as long as banks offer interest rates that are lower than the market average. Figures are still being worked out, but it looks like banks that want to participate in the program would have to issue 30-year fixed-rate mortgages at a 4.5 percent interest rate, which is more than a full point lower than the current market average. The New York Timesleads with news that the United Auto Workers union said it's ready to make new concessions to Detroit's Big Three as the company's leaders are scheduled to begin a new round of hearings on Capitol Hill today. The union's president said members would be willing to suspend a controversial "jobs bank" program, which pays laid-off workers, and allow the Big Three to delay billions of dollars in payments to a retiree health care trust.

The WSJ's world-wide newsbox leads with the United States calling on Pakistan to turn over at least some of the suspects in the Mumbai attacks, a move that aligns the United States more closely with India at a time when the tensions between the nuclear-armed neighbors continue to increase. USA Todayleads with a look at how property taxes are rising across the country even as home values have been plunging. The main reason for this is that the same laws that block taxes from skyrocketing when property values increase also prevent big decreases when values drop. In addition, most states take their time to change the assessed value of homes, so owners might have to wait several years until the plunge in prices is reflected in their tax bills. The Los Angeles Timesleads with news that an official Los Angeles County assessment recognized for the first time that Edith Rodriguez's life could have been saved if she had been properly treated. Her case became infamous when a security video was released that showed how a janitor mopped around Rodriguez and a nurse dismissed her complaints even as she writhed in pain on the waiting-room floor of a hospital.

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The WSJ and WP both emphasize that the new plan to revitalize the stalled housing market is still in the discussion stage. And Treasury officials seem reluctant to discuss details out of fear that news of the plan might encourage consumers to put off buying a new home. Still, not every new homebuyer would be helped by the plan since borrowers would have to qualify for a mortgage guaranteed by Fannie Mae, Freddie Mac, or the Federal Housing Administration, which, among other things, means they would have to document their income. This would allow the Treasury to steer clear of riskier loans. How much the plan would cost is still up in the air, but there's word that the Treasury is considering financing it by issuing Treasury debt at 3 percent, which could allow the government to make a profit if it does indeed end up buying securities that pay 4.5 percent.

In addition to the two specific concessions, the president of the UAW, Ron Gettelfinger, also said the union would be willing to modify other terms of its contracts, which could include wages and benefits, but they would require approval from members. Gettelfinger made it clear he wasn't happy about making the announcement, particularly since workers had agreed to major concessions last year, and big financial institutions weren't asked to make the same types of sacrifices before the government handed over billions of dollars. "I'm having a little problem myself understanding why there's a double standard here," he told reporters. "But we accept it and we'll play by those rules." Gettelfinger also emphasized that concessions from workers alone wouldn't save the domestic auto industry. "To be honest with you right now, if a UAW membership went into these facilities and worked for nothing," he said, "it would not help the companies that much."

The NYT calls the UAW announcement "surprising," but the LAT points out that as far as the jobs bank is concerned, the union had little choice, and many had expected this would happen. The program has been highly controversial because it pays laid-off workers, but giving it up is largely symbolic because it currently supports around 3,600 workers, according to the NYT.

The WSJ notes that there seems to be less hostility toward the Big Three among lawmakers than there was when they testified last month. But whether lawmakers will be able to pull off a rescue of the Big Three is still far from clear. Sen. Christopher Dodd has been tasked with trying to create a consensus rescue package in an effort to try to circumvent the deep divisions that exist in the House over the issue. Even with the news that General Motors could become insolvent by the end of the month, Democratic leaders are concerned they don't have enough votes to quickly pass a rescue package and insist that President Bush and President-elect Barack Obama will have to carry out a massive lobbying push to convince reluctant lawmakers.

On the same day as Secretary of State Condoleezza Rice urged Pakistan to aid in the investigations of the Mumbai attacks, thousands of protesters in India took to the streets and angrily demanded answers from a government that failed to protect its own people while also chanting anti-Pakistan slogans. The NYT fronts a piece looking into the mounting evidence that the militant group Lashkar-e-Taiba was behind the attacks. The paper hears word from a former Defense Department official that U.S. intelligence analysts "suspect that former officers of Pakistan's powerful spy agency and its army helped train the Mumbai attackers." The WSJ gets similar word from a senior Mumbai police official who says former Pakistani military personnel trained the terrorists. The Pakistani government has denied any involvement, but the fact that Lashkar operates with near impunity inside the country is "raising questions whether it can—or wants to—rein in militancy," says the NYT.

Slate's Jack Shafer tells readers they should "keep pinches of salt handy" with the news that is coming out of Mumbai since many dispatches about fast-moving stories "turn out to be crap." Indeed, the NYT seems to be warning readers that they should at the very least be a bit skeptical of the mounting evidence of Pakistani involvement. It's not only that India has a long-standing feud with Pakistan, but the United States also has a strong interest in targeting militant groups in Pakistan that often threaten American forces in Afghanistan.

After some hints that the Obama team would be more involved in deciding how the $700 billion rescue package should be used, Treasury Department officials are back to complaining that the president-elect is keeping his distance, reports the WSJ. Obama has had three news conferences on the economy, but the president-elect continues to keep things vague when discussing how the government should be involved in propping up the economy. Obama's statements about the bailout package still center on the painfully obvious, such as saying that there should be strong oversight. Even when it comes to trying to find a way to avoid more home foreclosures—a subject near and dear to Democrats—Obama's aides have yet to present any type of plan they'd like to see implemented. David Axelrod, a senior Obama adviser, says it would be presumptuous to comment on how the money should be used until Treasury Secretary Henry Paulson makes it clear he'll seek the second installment of $350 billion. When told the commitment could come next week, Axelrod answered, "Well, that's not this week."

On the NYT's op-ed page, Charles Seife says the current recount going on in Minnesota to determine who won the state's Senate seat "is futile." Even if there were absolutely no problems with missing or confusing ballots, any manual recount is going to have a tiny margin of error. Normally these are meaningless, but the Minnesota Senate race is so tight that the "error rate is more than double the margin between the two camps." Ultimately, whoever comes out ahead after all the counting is done, "the outcome will really be a statistical tie." The good news is that Minnesota law has a provision for ties. "It's hard to swallow," writes Seife, "but the right way to end the senatorial race between Mr. Coleman and Mr. Franken will be to flip a coin."

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