'Bad Bank' Plan Gains MomentumThe Obama Administration is pondering a move to set up a 'bad bank' operation to help stop the ongoing credit crunch facing banks that have toxic assets on their books.
The FDIC may be tapped to run the operation. Under it the government would buy the toxic assets, and the FDIC would issue bonds guaranteed by the FDIC to help take the bad assets, manage them and sell them.
The FDIC is the federal regulator that handles banks that fail, so it is seen as the most logical agency to run such an operation. FDIC Chairman Sheila Bair has pushed her agency as the one with the expertise to run the operation. Sources close to the issue say Obama could announce outlines of a financial rescue plan soon.
Stocks gained on the news, and pushed a global rise based on the news. The S&P 500 index was up 3.1 percent and bank stocks also rose on the news.
The bad-bank plan would give the government a chance to rewrite some of the mortgages that are part of many banks problems with bad debt. Some banks could be taken over by the government as part of the plan but nationalization of a large part of the industry is unlikely say experts.
House Passes $819 billion Stimulus Bill
On Wednesday, President Obama's $819 billion stimulus bill passed on a 244 to 188 vote in the House of Representatives. The bill had no Republican support despite heavy lobbying by Obama for bi-partisan support. The Senate is to take up the bill next week, as Democrats see the package can quickly create jobs and provide a boost to economic growth.
Republicans have pushed against the package, saying it has too much spending in it, and that it doesn't have enough tax cuts that go far enough to help taxpayers.
The Senate will vote on its version of the bill that has some significant differences in it. The two sides will then have to combine and reconcile the two bills and vote on a final version. Congress has put the legislation on a fast track, as all parties see quick action has to be taken to push the economy out of the deepening recession.
Workers on Unemployment at New High
The number of American workers getting unemployment benefits has hit an all time high according to the Labor Department's latest numbers. As more layoffs are flooding throughout industries, the Labor Department reports that the number of workers continuing to claim unemployment insurance for the week ending January 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967.
This reflects an increase of 159,000 from the week before, and is higher than the 4.65 million economists had predicted.
This total isn't including the more than 1.7 million people already receiving unemployment payments under an extended unemployment compensation program that Congress authorized last summer. The total number of unemployed workers getting payments is nearer to 6.5 million.