WASHINGTON – Investors are still trading common shares of Fannie Mae, Freddie Mac and American International Group Inc. by the billions, even though analysts say their prices are almost certain to go to zero.
All three are majority-owned by the government and are losing huge sums of money. The Securities and Exchange Commission and other regulators lack authority to end trading of stocks in such "zombie" companies that technically are alive — until the government takes them off life support.
Shares of the two mortgage giants and the insurer have been swept up in a summer rally in financial stocks. Investors have been trading their shares at abnormally high volumes, despite analysts' warnings that they're destined to lose their money.
"People have done well by trading them (in the short term), but when it gets to the end of the road, these stocks are going to be worth zero," said Bose George, an analyst with the investment bank Keefe, Bruyette & Woods Inc.
Some of the activity involves day traders aiming to profit from short-term price swings, George said. But he said inexperienced investors might have the misimpression that the companies may recover or be rescued.
"That would be kind of unfortunate," he said. "There could be a lot of improvement in the economy, and these companies would still be worth zero."
The government continues to support the companies with billions in taxpayer money, saying they still play a crucial role in the financial system.
Fannie and Freddie buy loans from banks and sell them to investors — a role critical to the mortgage market. They have tapped about $96 billion out of a potential $400 billion in aid from the Treasury Department.
Officials have said AIG's failure would be disastrous for the financial markets. Treasury and the Federal Reserve have spent about $175 billion on AIG and AIG-related securities. The company also has access to $28 billion from the $700 billion financial industry bailout.
But analysts say the wind-down strategies for the companies are almost sure to wipe out any common equity, making their shares worthless.
"There are some folks that believe that somehow that 20 percent (of the stock) that's out there in the public market might be worth something someday," said Daniel Alpert, managing director of the investment bank Westwood Capital LLC. But he said the three companies are doomed because they are "massively indebted," and the values of their assets are declining.
The stocks remain in circulation mainly for two reasons: They've violated no rules on the New York Stock Exchange, where they are traded. And no regulator has the power to suspend their trading without evidence securities laws are being violated.
Alpert said no regulations exist to deal with cases where the government props up unsustainable companies.
By contrast, regulators were able to warn investors about stock in the "old" General Motors, which also sits on a mound of government debt. The SEC and the Financial Industry Regulatory Authority, the brokerage industry's self-policing group, have issued alerts and taken other steps to prevent investor losses on that stock.
In that case, the SEC could act because GM acknowledged the stock was headed for zero in a restructuring plan filed with the SEC.
The SEC says it has no reason to suspend trading of stocks that still technically meet its standards, which include filing timely financial reports and disclosing events that could affect share values.
The NYSE's rules include maintaining minimum numbers of shareholders and market capitalization. But they give the exchange full discretion over which stocks are listed — regardless of whether a company meets those listing standards.
FINRA has jurisdiction over NASDAQ-traded stocks and over "pink sheet" stocks, which are worth too little to be traded on a major exchange. It has no jurisdiction over stocks on the NYSE.
Shares of Fannie, Freddie and AIG — along with their trading volumes — have jumped this summer, when activity normally fades as traders take vacations. Fannie shares have more than tripled since the end of July. Their volume soared to 360 million shares Thursday from 6.45 million shares on the last day of July.
Freddie and AIG shares have surged threefold since then. Freddie's volume jumped to 191 million shares from 4.5 million. And 148 million AIG shares changed hands on Thursday, compared with 5 million on July 31.
By comparison, the trading volume of General Electric Co.'s common shares fell to around 63.7 million shares Thursday, compared with 109 million shares July 31. The stock price rose 5.3 percent in that stretch.
AIG shares rose $10.15, or 26.9 percent, to $47.84 Thursday. Analysts speculated the company might be reconciling with former CEO Maurice "Hank" Greenberg, who could help bring private capital and other business benefits to the company.
A reverse stock split in early July raised the price by a factor of 20. In a reverse split, a stock price is increased, and the number of shares are reduced by a similar proportion. It has no effect on shareholders' equity.
Fannie shares closed up 3.8 percent at $1.92 Thursday; Freddie shares rose 10 percent to $2.24.
Fannie and Freddie's government owners haven't announced their plans for the companies. That means there's a possibility — however remote — that their shares could retain some value. But the administration is expected to announce in February that the companies will be wound down, merged into a federal agency or have their bad mortgage assets split into a new government-backed company.
All those possibilities are almost certain to eliminate any remaining shareholder equity, analysts said.
Lawrence J. White, a professor at New York University's Stern School of Business, said the higher trading volumes might reflect speculation about the government's February announcement.
With the share prices still so low, White said investors are willing to bet on the outcome of the government's announcement. He said trading volume is likely to grow further, with even sharper price swings, as February approaches.
Still, Freddie Mac Chairman John Koskinen said the price fluctuations were hard to understand.
"I have absolutely no idea what that represents," he said.
Representatives for Fannie, the SEC, AIG, FINRA and the NYSE declined to comment. Spokeswomen for Treasury, which owns most of AIG, and the Federal Housing Finance Agency, which holds Fannie and Freddie in conservatorship, also wouldn't comment.
by the associated press
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Thursday, August 27, 2009
Monday, August 24, 2009
Oil hits $74 per barrel on economic optimism
HOUSTON — Oil prices approached $75 a barrel Monday for the first time in 10 months amid growing optimism that the world's economies are on the mend.
Benchmark crude for October delivery rose 73 cents to $74.62 a barrel on the New York Mercantile Exchange. Oil last topped $75 in October.
Natural gas rebounded strongly from new seven-year lows Monday, though prices remained well below $3 per 1,000 cubic feet.
Expectations that demand for energy will grow were spurred Friday by Federal Reserve Chairman Ben Bernanke, who said the U.S. economy is reviving. Bernanke's remarks and signs of improvement in the U.S. housing market sent stock markets higher, and that carried over into the new week.
Even before Bernanke spoke, however, prices had already begun to rise on a large and unexpected drawdown in U.S. oil supplies last week.
Equities appeared to follow energy prices, which took off midweek.
Asian and European markets were higher Monday, and the Dow Jones industrial average rose moderately in early trading.
This time, it appeared energy prices followed equities trading.
"No doubt about it, we're riding the wave of a strong stock market," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "These bullish financial developments have forced a huge amount of passive capital into commodities, especially the oil space."
It's been slightly more than a year since a barrel of crude soared close to $150 a barrel. No one expects another run to those heights anytime soon, but even the prospect of increasing demand is sure to keep upward pressure on oil prices.
In a report Monday, trader and analyst Stephen Schork said once oil gets to $75, "there is not a hell of a lot to prevent it from going to $80 or $85."
Natural gas is another story. Prices are at seven-year lows and supplies continue to grow. Friday marked the 11th session out of 12 trading days in which gas prices fell.
"Demand prospects are the worst they have been in recent memory," said PFGBest Research analyst Phil Flynn.
It has been a very moderate summer and meteorologists are forecasting the same through the fall. That could drive prices down even further if people don't need as much heat for their homes.
Gasoline prices have flattened and few expect a major run on prices as the driving season winds down.
Retail gas prices were almost unchanged overnight, falling to a new national average of $2.626 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 14.5 cents more expensive than it was a month ago, but it's $1.062 cheaper than last year.
In other Nymex trading, gasoline for September delivery added 265 cents to $2.0221 a gallon and heating oil for September delivery rose about 2 cents to $1.9246 a gallon. Natural gas for September delivery rose 7 cents to $2.875 per 1,000 cubic feet after tumbling 14.1 cents on Friday.
In London, Brent prices rose 21 cents to $74.40 a barrel on the ICE Futures exchange.
by the associated press
Benchmark crude for October delivery rose 73 cents to $74.62 a barrel on the New York Mercantile Exchange. Oil last topped $75 in October.
Natural gas rebounded strongly from new seven-year lows Monday, though prices remained well below $3 per 1,000 cubic feet.
Expectations that demand for energy will grow were spurred Friday by Federal Reserve Chairman Ben Bernanke, who said the U.S. economy is reviving. Bernanke's remarks and signs of improvement in the U.S. housing market sent stock markets higher, and that carried over into the new week.
Even before Bernanke spoke, however, prices had already begun to rise on a large and unexpected drawdown in U.S. oil supplies last week.
Equities appeared to follow energy prices, which took off midweek.
Asian and European markets were higher Monday, and the Dow Jones industrial average rose moderately in early trading.
This time, it appeared energy prices followed equities trading.
"No doubt about it, we're riding the wave of a strong stock market," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates. "These bullish financial developments have forced a huge amount of passive capital into commodities, especially the oil space."
It's been slightly more than a year since a barrel of crude soared close to $150 a barrel. No one expects another run to those heights anytime soon, but even the prospect of increasing demand is sure to keep upward pressure on oil prices.
In a report Monday, trader and analyst Stephen Schork said once oil gets to $75, "there is not a hell of a lot to prevent it from going to $80 or $85."
Natural gas is another story. Prices are at seven-year lows and supplies continue to grow. Friday marked the 11th session out of 12 trading days in which gas prices fell.
"Demand prospects are the worst they have been in recent memory," said PFGBest Research analyst Phil Flynn.
It has been a very moderate summer and meteorologists are forecasting the same through the fall. That could drive prices down even further if people don't need as much heat for their homes.
Gasoline prices have flattened and few expect a major run on prices as the driving season winds down.
Retail gas prices were almost unchanged overnight, falling to a new national average of $2.626 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service. A gallon of regular unleaded is 14.5 cents more expensive than it was a month ago, but it's $1.062 cheaper than last year.
In other Nymex trading, gasoline for September delivery added 265 cents to $2.0221 a gallon and heating oil for September delivery rose about 2 cents to $1.9246 a gallon. Natural gas for September delivery rose 7 cents to $2.875 per 1,000 cubic feet after tumbling 14.1 cents on Friday.
In London, Brent prices rose 21 cents to $74.40 a barrel on the ICE Futures exchange.
by the associated press
Cash for Clunkers program is ending
It was a race to the finish for dealers and customers alike as the government's Cash for Clunkers program headed into its final lap on Monday.
Over the weekend, car dealers across the country watched their lots grow empty as crowds rushed to trade in gas guzzlers after the government said that the $3 billion rebate program would end at 8 p.m. EDT Monday, two weeks earlier than expected.
Transportation Secretary Ray LaHood, speaking to reporters in Norristown, Pa., called the program an unprecedented success and a boon for car dealers, automakers, scrap yards and financial institutions.
"Once the program ends at 8 o'clock there will be 700,000 to 800,000 cars that have been sold, most of them fuel efficient," replacing gas-guzzling cars and trucks, LaHood said.
Transportation officials said through early Monday, dealers had submitted 625,000 vouchers totaling $2.58 billion and expected to work up to the deadline to submit the proper paperwork.
Adding to the urgency, some dealers said they would stop Cash for Clunkers sales even earlier to make sure the government reimbursed them for the rebates — or because they didn't have enough eligible cars left.
"We thought about it a couple weeks ago," said Annette Palmer, 51, at Town and Country Honda in Berlin, Vt., on Saturday with her husband. They hoped to trade in a 1999 Jeep Grand Cherokee for a Honda CR-V.
"We kind of dragged our feet. Then we heard it was closing and we picked up our feet and ran," she said.
Though short of some new models, such as the Ford Focus, Honda Civic, Toyota Corolla and Nissan Altima, many dealers were still selling as many cars as they could before Monday night's deadline.
Standing outside one of his Hyundai dealerships in Appleton, Wis., John Bergstrom said customers traded in 100 clunkers throughout his fleet of 20 dealerships on Saturday and 100 the day before. They were his two biggest sales days during the clunkers program.
"That's about as good as it gets," Bergstrom said. "It's going out with a bang."
In all, Bergstrom said his dealerships — whose brands include Ford, GM and Toyota — sold 800 cars during the program, boosting sales 30 percent. He had to bring in extra staff to deal with the paperwork, but the sales were worth the hassle, Bergstrom said.
Cash for Clunkers has been wildly successful in spurring new-car sales and getting gas-guzzling models off the road, though some energy experts have said the pollution reduction is too small to be cost-effective. Customers receive rebates of between $3,500 and $4,500, depending on the improvement in fuel efficiency from their old vehicle to their new one. As of early Friday, nearly half a million cars had been sold through the program.
But the new sales left many dealers worried about not being reimbursed by the government. As of Friday, dealers had been reimbursed for just a small fraction of the billions in sales.
Some dealers chose to stop participating over the weekend so they could have enough time to process and file the paperwork, including AutoNation Inc., the nation's largest auto dealership chain.
Martin Main Line Honda in the Philadelphia suburb of Ardmore stopped its Cash for Clunkers sales at noon on Saturday. But by late afternoon there were still groups of people wandering the lot.
General sales manager Michael Freeman said the program had been "overwhelming," with 115 clunker sales and big surges in customer traffic at the start and now at the end. He's aiming to get the final stack of paperwork filed before Monday's deadline.
"I have people upstairs, that's all they're doing — paperwork," he said. "The backlog is a nightmare, and it's starting to be a nightmare at the end."
by the associated press
Over the weekend, car dealers across the country watched their lots grow empty as crowds rushed to trade in gas guzzlers after the government said that the $3 billion rebate program would end at 8 p.m. EDT Monday, two weeks earlier than expected.
Transportation Secretary Ray LaHood, speaking to reporters in Norristown, Pa., called the program an unprecedented success and a boon for car dealers, automakers, scrap yards and financial institutions.
"Once the program ends at 8 o'clock there will be 700,000 to 800,000 cars that have been sold, most of them fuel efficient," replacing gas-guzzling cars and trucks, LaHood said.
Transportation officials said through early Monday, dealers had submitted 625,000 vouchers totaling $2.58 billion and expected to work up to the deadline to submit the proper paperwork.
Adding to the urgency, some dealers said they would stop Cash for Clunkers sales even earlier to make sure the government reimbursed them for the rebates — or because they didn't have enough eligible cars left.
"We thought about it a couple weeks ago," said Annette Palmer, 51, at Town and Country Honda in Berlin, Vt., on Saturday with her husband. They hoped to trade in a 1999 Jeep Grand Cherokee for a Honda CR-V.
"We kind of dragged our feet. Then we heard it was closing and we picked up our feet and ran," she said.
Though short of some new models, such as the Ford Focus, Honda Civic, Toyota Corolla and Nissan Altima, many dealers were still selling as many cars as they could before Monday night's deadline.
Standing outside one of his Hyundai dealerships in Appleton, Wis., John Bergstrom said customers traded in 100 clunkers throughout his fleet of 20 dealerships on Saturday and 100 the day before. They were his two biggest sales days during the clunkers program.
"That's about as good as it gets," Bergstrom said. "It's going out with a bang."
In all, Bergstrom said his dealerships — whose brands include Ford, GM and Toyota — sold 800 cars during the program, boosting sales 30 percent. He had to bring in extra staff to deal with the paperwork, but the sales were worth the hassle, Bergstrom said.
Cash for Clunkers has been wildly successful in spurring new-car sales and getting gas-guzzling models off the road, though some energy experts have said the pollution reduction is too small to be cost-effective. Customers receive rebates of between $3,500 and $4,500, depending on the improvement in fuel efficiency from their old vehicle to their new one. As of early Friday, nearly half a million cars had been sold through the program.
But the new sales left many dealers worried about not being reimbursed by the government. As of Friday, dealers had been reimbursed for just a small fraction of the billions in sales.
Some dealers chose to stop participating over the weekend so they could have enough time to process and file the paperwork, including AutoNation Inc., the nation's largest auto dealership chain.
Martin Main Line Honda in the Philadelphia suburb of Ardmore stopped its Cash for Clunkers sales at noon on Saturday. But by late afternoon there were still groups of people wandering the lot.
General sales manager Michael Freeman said the program had been "overwhelming," with 115 clunker sales and big surges in customer traffic at the start and now at the end. He's aiming to get the final stack of paperwork filed before Monday's deadline.
"I have people upstairs, that's all they're doing — paperwork," he said. "The backlog is a nightmare, and it's starting to be a nightmare at the end."
by the associated press
Tuesday, August 11, 2009
New Volt to Get 230 MPG
WARREN, Michigan – General Motors Corp. said Tuesday its Chevrolet Volt rechargeable electric car should get 230 miles per gallon (98 kilometers per liter) of gasoline in city driving, more than four times the current champion, the Toyota Prius.
The Volt is powered by an electric motor and a battery pack with a 40-mile (65-kilometer) range. After that, a small internal combustion engine kicks in to generate electricity for a total range of 300 miles (480 kilometers). The battery pack can be recharged from a standard home outlet.
GM is marketing the 230-mile (370-kilometer) figure following early tests using draft guidelines from the U.S. Environmental Protection Agency for calculating the mileage of extended range electric vehicles.
The EPA guidelines, developed with guidance from automakers, figure that cars like the Volt will travel more on straight electricity in the city than on the highway. If a person drives the Volt less than 40 miles (65 kilometers), in theory they could go without using gasoline.
Highway mileage estimates — which are generally higher than city ones — for the Volt have yet to be released using the EPA's methodology.
"We are confident the highway (mileage) will be a triple-digit composite," GM CEO Fritz Henderson said.
If the figure is confirmed by the EPA, which does the tests for the mileage posted on new car door stickers, the Volt would be the first car to exceed triple-digit gas mileage.
EPA said in a statement Tuesday that it has not tested a Volt "and therefore cannot confirm the fuel economy values claimed by GM." The agency said it applauded "GM's commitment to designing and building the car of the future — an American made car that will save families money, significantly reduce our dependence on foreign oil and create good-paying American jobs."
GM has produced about 30 Volts so far and is making 10 a week, CEO Fritz Henderson said during a presentation of the vehicle at the company's technical center in the Detroit suburb of Warren.
Henderson said charging the volt will cost about 40 cents a day, at approximately 5 cents per kilowatt hour.
Most automakers are working similar plug-in designs, but GM could be the leader with the Volt, which is due in showrooms late in 2010.
Toyota's Prius, the most efficient car now sold in the U.S., gets 48 miles per gallon (20 kilometers per liter) of gas. It is a gas-electric hybrid that runs on a small internal combustion engine assisted by a battery-powered electric motor to save gasoline.
Although Henderson would not give details on pricing, the first-generation Volt is expected to cost near $40,000, making it cost-prohibitive to many people even if gasoline returns to $4 per gallon.
The price is expected to drop with future generations of the Volt, but GM has said government tax credits of up to $7,500 and the savings on fuel could make it cost-effective, especially at 230 miles per gallon (98 kilometers per liter).
"We get a little cautious about trying to forecast what fuel prices will do," said Tony Posawatz, GM's vehicle line director for the Volt. "We achieved this number and if fuel prices go up, it certainly does get more attractive even in the near-term generation."
Figures for the Volt's combined city/highway mileage have not yet been calculated, Posawatz said. The combined mileage will be in the triple digits as well, he said, but both combined and highway will be worse than city because the engine runs more on longer highway trips.
The mileage figure could vary as the guidelines are refined and the Volt gets further along in the manufacturing process, Posawatz said.
GM is nearly halfway through building about 80 Volts that will look and behave like the production model, and testing is running on schedule, Posawatz said.
Two critical areas, battery life and the electronic switching between battery and engine power, are still being refined, but the car is on schedule to reach showrooms late in 2010, he said.
GM is simulating tests to make sure the new lithium-ion batteries last 10 years, Posawatz said, as well as testing battery performance in extremely hot and cold climates.
"We're further along, but we're still quite a ways from home," he said. "We're developing quite a knowledge base on all this stuff. Our confidence is growing."
The other area of new technology, switching between battery and engine power, is proceeding well, he said, with engineers just fine-tuning the operations.
"We're very pleased with the transition from when it's driving EV (electric vehicle) to when the engine and generator kick in," he said.
GM also is finishing work on the power cord, which will be durable enough that it can survive being run over by the car. The Volt, he said, will have software on board so it can be programmed to begin and end charging during off-peak electrical use hours.
It will be easy for future Volt owners living in rural and suburban areas to plug in their cars at night, but even Henderson recognized the challenge urban, apartment dwellers, or those that park their car on the street might have recharging the Volt. There could eventually be charging stations set up by a third-party to meet such a demand, Henderson said.
Chrysler Group, Ford Motor Co. and Daimler AG are all developing plug-ins and electric cars, and Toyota Motor Corp. is working on a plug-in version of its gas-electric hybrid system. Nissan Motor Co. announced last month that it would begin selling an electric vehicle in Japan and the U.S. next year.
The Volt is powered by an electric motor and a battery pack with a 40-mile (65-kilometer) range. After that, a small internal combustion engine kicks in to generate electricity for a total range of 300 miles (480 kilometers). The battery pack can be recharged from a standard home outlet.
GM is marketing the 230-mile (370-kilometer) figure following early tests using draft guidelines from the U.S. Environmental Protection Agency for calculating the mileage of extended range electric vehicles.
The EPA guidelines, developed with guidance from automakers, figure that cars like the Volt will travel more on straight electricity in the city than on the highway. If a person drives the Volt less than 40 miles (65 kilometers), in theory they could go without using gasoline.
Highway mileage estimates — which are generally higher than city ones — for the Volt have yet to be released using the EPA's methodology.
"We are confident the highway (mileage) will be a triple-digit composite," GM CEO Fritz Henderson said.
If the figure is confirmed by the EPA, which does the tests for the mileage posted on new car door stickers, the Volt would be the first car to exceed triple-digit gas mileage.
EPA said in a statement Tuesday that it has not tested a Volt "and therefore cannot confirm the fuel economy values claimed by GM." The agency said it applauded "GM's commitment to designing and building the car of the future — an American made car that will save families money, significantly reduce our dependence on foreign oil and create good-paying American jobs."
GM has produced about 30 Volts so far and is making 10 a week, CEO Fritz Henderson said during a presentation of the vehicle at the company's technical center in the Detroit suburb of Warren.
Henderson said charging the volt will cost about 40 cents a day, at approximately 5 cents per kilowatt hour.
Most automakers are working similar plug-in designs, but GM could be the leader with the Volt, which is due in showrooms late in 2010.
Toyota's Prius, the most efficient car now sold in the U.S., gets 48 miles per gallon (20 kilometers per liter) of gas. It is a gas-electric hybrid that runs on a small internal combustion engine assisted by a battery-powered electric motor to save gasoline.
Although Henderson would not give details on pricing, the first-generation Volt is expected to cost near $40,000, making it cost-prohibitive to many people even if gasoline returns to $4 per gallon.
The price is expected to drop with future generations of the Volt, but GM has said government tax credits of up to $7,500 and the savings on fuel could make it cost-effective, especially at 230 miles per gallon (98 kilometers per liter).
"We get a little cautious about trying to forecast what fuel prices will do," said Tony Posawatz, GM's vehicle line director for the Volt. "We achieved this number and if fuel prices go up, it certainly does get more attractive even in the near-term generation."
Figures for the Volt's combined city/highway mileage have not yet been calculated, Posawatz said. The combined mileage will be in the triple digits as well, he said, but both combined and highway will be worse than city because the engine runs more on longer highway trips.
The mileage figure could vary as the guidelines are refined and the Volt gets further along in the manufacturing process, Posawatz said.
GM is nearly halfway through building about 80 Volts that will look and behave like the production model, and testing is running on schedule, Posawatz said.
Two critical areas, battery life and the electronic switching between battery and engine power, are still being refined, but the car is on schedule to reach showrooms late in 2010, he said.
GM is simulating tests to make sure the new lithium-ion batteries last 10 years, Posawatz said, as well as testing battery performance in extremely hot and cold climates.
"We're further along, but we're still quite a ways from home," he said. "We're developing quite a knowledge base on all this stuff. Our confidence is growing."
The other area of new technology, switching between battery and engine power, is proceeding well, he said, with engineers just fine-tuning the operations.
"We're very pleased with the transition from when it's driving EV (electric vehicle) to when the engine and generator kick in," he said.
GM also is finishing work on the power cord, which will be durable enough that it can survive being run over by the car. The Volt, he said, will have software on board so it can be programmed to begin and end charging during off-peak electrical use hours.
It will be easy for future Volt owners living in rural and suburban areas to plug in their cars at night, but even Henderson recognized the challenge urban, apartment dwellers, or those that park their car on the street might have recharging the Volt. There could eventually be charging stations set up by a third-party to meet such a demand, Henderson said.
Chrysler Group, Ford Motor Co. and Daimler AG are all developing plug-ins and electric cars, and Toyota Motor Corp. is working on a plug-in version of its gas-electric hybrid system. Nissan Motor Co. announced last month that it would begin selling an electric vehicle in Japan and the U.S. next year.
by the associated press
Saturday, August 8, 2009
FHA loan holders could get help
WASHINGTON — Loans backed by the Federal Housing Administration will be eligible for payment reductions similar to the Obama administration’s loan modification program, the government said.
Effective Aug. 15, financially troubled homeowners who have an FHA-insured loan can apply for a modification under a program parallel to "Making Home Affordable” to help lower their payments and avoid foreclosure.
The program, launched in March, is designed to lower monthly payments for 3 million to 4 million borrowers, although only about 200,000 have been helped so far. Lenders have agreed to adjust 500,000 loans by Nov. 1.
The FHA, which backs about 5 million loans, is a government-run mortgage insurance program.
It became the main source of home loans to borrowers with poor credit and low down payments after the collapse of the subprime lending market.
The agency lets borrowers take out home loans with down payments as low as 3.5 percent, compared with 20 percent for a typical loan that doesn’t require mortgage insurance.
By law, FHA cannot offer borrowers interest rates as low as 2 percent, which are available under the Obama plan.
Instead, FHA will allow lenders to set aside up to 30 percent of the total principal balance until the house is sold or the property is refinanced. No interest will be charged on that amount.
Government officials did not have an estimate of how many borrowers would qualify.
"We’re bringing another important tool to the table to help struggling families who are desperate to keep their homes,” Housing and Urban Development Secretary Shaun Donovan said in a statement.
Lenders who participate in the FHA program will receive an incentive fee of up to $1,250 and can be reimbursed for $250 in costs.
by the associated press
Effective Aug. 15, financially troubled homeowners who have an FHA-insured loan can apply for a modification under a program parallel to "Making Home Affordable” to help lower their payments and avoid foreclosure.
The program, launched in March, is designed to lower monthly payments for 3 million to 4 million borrowers, although only about 200,000 have been helped so far. Lenders have agreed to adjust 500,000 loans by Nov. 1.
The FHA, which backs about 5 million loans, is a government-run mortgage insurance program.
It became the main source of home loans to borrowers with poor credit and low down payments after the collapse of the subprime lending market.
The agency lets borrowers take out home loans with down payments as low as 3.5 percent, compared with 20 percent for a typical loan that doesn’t require mortgage insurance.
By law, FHA cannot offer borrowers interest rates as low as 2 percent, which are available under the Obama plan.
Instead, FHA will allow lenders to set aside up to 30 percent of the total principal balance until the house is sold or the property is refinanced. No interest will be charged on that amount.
Government officials did not have an estimate of how many borrowers would qualify.
"We’re bringing another important tool to the table to help struggling families who are desperate to keep their homes,” Housing and Urban Development Secretary Shaun Donovan said in a statement.
Lenders who participate in the FHA program will receive an incentive fee of up to $1,250 and can be reimbursed for $250 in costs.
by the associated press
New appraisal code
CHICAGO — New rules aimed at making home appraisals more accurate are raising costs and prompting longer waits to get to the closing table, some in the mortgage industry say.
The new regulations— known as the Home Valuation Code of Conduct and in effect less than three months — have driven up the cost of home appraisals, said Keith Stewart, a mortgage consultant with NorthPoint Lending Group in Chicago.
An appraisal that once cost $275 to $300 now runs $375 to $500, Stewart said. That’s because under the new rules a third party, often an appraisal management company, must serve as middleman between a mortgage broker and the appraiser, said Drew Kessler, director of sales for Rand Mortgage in New City, N.Y.
A bill in the U.S. House of Representatives proposes a moratorium on the new rules, as some in the industry are concerned the code will slow a housing-market recovery.
But the Federal Housing Finance Agency disputes those claims and maintains that the new code is necessary to make sure homes are appraised correctly and fairly. The code was announced by Fannie Mae and Freddie Mac last year, went into effect in May and applies to conforming mortgages, which are those that are able to be sold to Fannie Mae and Freddie Mac, the troubled government-backed mortgage agencies.
"Unfortunately, during the 2005-to-2007 period, mortgage lending was much too aggressive and placed pressure on the appraisal process,” the FHFA said in a recent statement. "In some cases, that resulted in unrealistically high appraisals, hurting home buyers as well as investors. The HVCC is designed to promote professional appraisals free from inappropriate pressure from lenders, borrowers or brokers.”
What was at issue?
In short, the rules aim to address a serious problem faced by many appraisers: the pressure to produce a desired value on a property, said Bill Garber, director of government and external relations for the Appraisal Institute, an association of professional real-estate appraisers.
In some cases, appraisers were motivated to comply with the request because they didn’t want to risk losing business.
"Mortgage-broker pressure on appraisers was real during the past 10 to 20 years,” Garber said. "They are no longer able to order, select or compensate appraisers, and as such, some of that pressure has subsided.”
Added Jim Amorin, president of the Appraisal Institute: "Consumers were maybe paying more for a home than it was really worth because of undue pressure being applied” to the appraiser.
The FHFA also said that rising costs are not due to the new code, but instead can be attributed to lenders’ tightened underwriting standards and mortgage-security investors’ desire to reduce fraud. They’re increasingly requiring additional information or second appraisals, according to the agency.
Other costs increase
But the new rules cause other indirect costs, too, Kessler said. Under the new code, the appraisals are not "portable,” meaning a consumer’s mortgage broker can no longer use the same appraisal to apply for loans at different lenders. An appraisal done for a Bank of America loan, for example, can’t be easily used to apply for a Wells Fargo mortgage, he said.
"Previously, the broker owned (the appraisal). That has changed. Now, it’s in the name of the actual lender,” Kessler said.
If a borrower decides to pursue a mortgage with another lender — after an appraisal has already been procured through a different lender — the borrower may need to pay for a second appraisal. Even though the borrower typically pays for the appraisal, it is held by the person or firm that orders the appraisal, he said.
The FHFA disputes this complaint, too, saying that appraisals are transferable between lenders under the new rules, although — and this is key — whether a lender decides to make a transfer or accept another lender’s appraisal is up to that lender.
Reports of time delays are also common among mortgage brokers, and the FHFA acknowledges that the implementation of the code may have slowed the mortgage process a bit. But the agency also said there are other reasons for delays, including the efficiency of an underwriting staff or increased demands by lenders.
by the associated press
The new regulations— known as the Home Valuation Code of Conduct and in effect less than three months — have driven up the cost of home appraisals, said Keith Stewart, a mortgage consultant with NorthPoint Lending Group in Chicago.
An appraisal that once cost $275 to $300 now runs $375 to $500, Stewart said. That’s because under the new rules a third party, often an appraisal management company, must serve as middleman between a mortgage broker and the appraiser, said Drew Kessler, director of sales for Rand Mortgage in New City, N.Y.
A bill in the U.S. House of Representatives proposes a moratorium on the new rules, as some in the industry are concerned the code will slow a housing-market recovery.
But the Federal Housing Finance Agency disputes those claims and maintains that the new code is necessary to make sure homes are appraised correctly and fairly. The code was announced by Fannie Mae and Freddie Mac last year, went into effect in May and applies to conforming mortgages, which are those that are able to be sold to Fannie Mae and Freddie Mac, the troubled government-backed mortgage agencies.
"Unfortunately, during the 2005-to-2007 period, mortgage lending was much too aggressive and placed pressure on the appraisal process,” the FHFA said in a recent statement. "In some cases, that resulted in unrealistically high appraisals, hurting home buyers as well as investors. The HVCC is designed to promote professional appraisals free from inappropriate pressure from lenders, borrowers or brokers.”
What was at issue?
In short, the rules aim to address a serious problem faced by many appraisers: the pressure to produce a desired value on a property, said Bill Garber, director of government and external relations for the Appraisal Institute, an association of professional real-estate appraisers.
In some cases, appraisers were motivated to comply with the request because they didn’t want to risk losing business.
"Mortgage-broker pressure on appraisers was real during the past 10 to 20 years,” Garber said. "They are no longer able to order, select or compensate appraisers, and as such, some of that pressure has subsided.”
Added Jim Amorin, president of the Appraisal Institute: "Consumers were maybe paying more for a home than it was really worth because of undue pressure being applied” to the appraiser.
The FHFA also said that rising costs are not due to the new code, but instead can be attributed to lenders’ tightened underwriting standards and mortgage-security investors’ desire to reduce fraud. They’re increasingly requiring additional information or second appraisals, according to the agency.
Other costs increase
But the new rules cause other indirect costs, too, Kessler said. Under the new code, the appraisals are not "portable,” meaning a consumer’s mortgage broker can no longer use the same appraisal to apply for loans at different lenders. An appraisal done for a Bank of America loan, for example, can’t be easily used to apply for a Wells Fargo mortgage, he said.
"Previously, the broker owned (the appraisal). That has changed. Now, it’s in the name of the actual lender,” Kessler said.
If a borrower decides to pursue a mortgage with another lender — after an appraisal has already been procured through a different lender — the borrower may need to pay for a second appraisal. Even though the borrower typically pays for the appraisal, it is held by the person or firm that orders the appraisal, he said.
The FHFA disputes this complaint, too, saying that appraisals are transferable between lenders under the new rules, although — and this is key — whether a lender decides to make a transfer or accept another lender’s appraisal is up to that lender.
Reports of time delays are also common among mortgage brokers, and the FHFA acknowledges that the implementation of the code may have slowed the mortgage process a bit. But the agency also said there are other reasons for delays, including the efficiency of an underwriting staff or increased demands by lenders.
by the associated press
Bill will set lending rules, aid shoppers
WASHINGTON — Health care reform has drawn most of the attention on Capitol Hill lately, but for homebuyers, sellers and mortgage applicants the legislative ballgame will really get under way in September, when Congress begins serious work on the proposed Consumer Financial Protection Agency.
Legislation creating the new agency already is pending in the House, pushed by Financial Services Committee Chairman Rep. Barney Frank, D-Mass., who is its principal author. The Obama administration had outlined a similar plan at the end of June and considers passage of a bill a top priority.
Why should you care? What might the new agency do for you — or to you?
To begin with, you should be aware that the agency’s powers and oversight would extend far beyond mortgages and real estate — into all credit cards, debit cards, consumer loans, payday loans, credit reporting agencies, debt collection, stored-value cards and even investment advisory and financial advisory services, to name only part of the list.
The agency would be the dominant federal consumer protector in all home real estate settlements. It would regulate "affiliated” title, escrow and financing businesses connected with realty firms and builders. It would oversee equal credit opportunity and fair housing, and would set standards for all mortgage offerings, whether from the biggest national banks or the smallest local brokers.
Generally it wouldn’t seek outright bans on mortgage products that carry elevated risks — interest-only loans, for instance — but would require that lenders restrict such mortgages to well-informed applicants who can document that they understand the risks and afford the payments.
Within its first year, the agency would be tasked with creating consumer-friendly, uniform disclosures for all home purchase and financing transactions, starting with a combined "good-faith estimates” and truth-in-lending statement.
Banking and mortgage trade group leaders generally agree that the existing regulatory system failed badly, for consumers and the industry itself.
"Are reforms needed? Yes, absolutely. We’re in favor of better consumer protection,” said Anne Canfield, executive director of the Consumer Mortgage Coalition, a trade group that represents major mortgage originators and banks. How to go about achieving those reforms is where Canfield’s group and others part company with the administration and consumer supporters.
Canfield and other industry lobbyists are concerned about any radical shakeup of the way banks and mortgage companies traditionally have been overseen by the federal government. Currently the regulators responsible for checking on banks’ "safety and soundness” also are empowered to look for risky, discriminatory or anti-consumer practices and products at those institutions.
Handing over consumer protection and enforcement powers to a separate agency that might not understand the business side of the ledger could be burdensome for lenders, they argue, and could add extra layers of bureaucracy and nightmarish legal liabilities.
But proponents, such as Harvard Law School professor Elizabeth Warren, say the industry’s criticisms about stifling consumers’ choices and reshaping banking industry regulation are simply efforts to preserve the status quo.
"If the status quo is about choice,” asked Warren, an Oklahoma City native, "then explain why half of those (consumers) with subprime loans ‘chose’ high-risk, high-cost loans when they qualified for prime mortgages. The truth is no consumer ‘chose’ to accept the tricks and traps buried in the legalese of financial products,” she said — they were steered to those loans by lenders, brokers and Wall Street promoters who were not required by regulators to explain the risks to their customers.
→Outlook for the bill: Passage in the House appears likely. Count on the banks to mount their biggest battles in the Senate.
Washington Post Writers Group
Legislation creating the new agency already is pending in the House, pushed by Financial Services Committee Chairman Rep. Barney Frank, D-Mass., who is its principal author. The Obama administration had outlined a similar plan at the end of June and considers passage of a bill a top priority.
Why should you care? What might the new agency do for you — or to you?
To begin with, you should be aware that the agency’s powers and oversight would extend far beyond mortgages and real estate — into all credit cards, debit cards, consumer loans, payday loans, credit reporting agencies, debt collection, stored-value cards and even investment advisory and financial advisory services, to name only part of the list.
The agency would be the dominant federal consumer protector in all home real estate settlements. It would regulate "affiliated” title, escrow and financing businesses connected with realty firms and builders. It would oversee equal credit opportunity and fair housing, and would set standards for all mortgage offerings, whether from the biggest national banks or the smallest local brokers.
Generally it wouldn’t seek outright bans on mortgage products that carry elevated risks — interest-only loans, for instance — but would require that lenders restrict such mortgages to well-informed applicants who can document that they understand the risks and afford the payments.
Within its first year, the agency would be tasked with creating consumer-friendly, uniform disclosures for all home purchase and financing transactions, starting with a combined "good-faith estimates” and truth-in-lending statement.
Banking and mortgage trade group leaders generally agree that the existing regulatory system failed badly, for consumers and the industry itself.
"Are reforms needed? Yes, absolutely. We’re in favor of better consumer protection,” said Anne Canfield, executive director of the Consumer Mortgage Coalition, a trade group that represents major mortgage originators and banks. How to go about achieving those reforms is where Canfield’s group and others part company with the administration and consumer supporters.
Canfield and other industry lobbyists are concerned about any radical shakeup of the way banks and mortgage companies traditionally have been overseen by the federal government. Currently the regulators responsible for checking on banks’ "safety and soundness” also are empowered to look for risky, discriminatory or anti-consumer practices and products at those institutions.
Handing over consumer protection and enforcement powers to a separate agency that might not understand the business side of the ledger could be burdensome for lenders, they argue, and could add extra layers of bureaucracy and nightmarish legal liabilities.
But proponents, such as Harvard Law School professor Elizabeth Warren, say the industry’s criticisms about stifling consumers’ choices and reshaping banking industry regulation are simply efforts to preserve the status quo.
"If the status quo is about choice,” asked Warren, an Oklahoma City native, "then explain why half of those (consumers) with subprime loans ‘chose’ high-risk, high-cost loans when they qualified for prime mortgages. The truth is no consumer ‘chose’ to accept the tricks and traps buried in the legalese of financial products,” she said — they were steered to those loans by lenders, brokers and Wall Street promoters who were not required by regulators to explain the risks to their customers.
→Outlook for the bill: Passage in the House appears likely. Count on the banks to mount their biggest battles in the Senate.
Washington Post Writers Group
Exterminator warns of bee-killing ants
DALLAS — A species of ant that has ruined sewage pumps, fouled computers and made it difficult for homeowners to enjoy their yards has a new target: the honeybee.
The range of the so-called Rasberry crazy ant has more than doubled in the past year, swarming in 11 counties beginning near Houston and moving north, scientists say.
"It really is spreading at an alarming rate and we need to do research now,” said Danny McDonald, a Texas A&M University doctoral student who is examining the tiny creature’s biology and ecology. "There’s no time to wait.”
But serious research requires serious dollars.
The Texas Department of Agriculture and U.S. Department of Agriculture will fund in-depth research, but only if the ant gets the pest classification. And to do that, state officials say more research must be done. It’s a sticky Catch-22.
"This is absolutely idiotic,” said Tom Rasberry, the exterminator for whom the ant is named because he fought against them early on. "If killing honeybees does not put it in the ag pest category, I don’t know what does.”
Emerging by the billions during the warm, humid season, the reddish-brown insect is at its peak in August and September and appears resistant to over-the-counter ant killers. They are believed to have arrived in cargo through the port of Houston.
The ants — formally known as "paratrenicha species near pubens” — are called "crazy” because they wander erratically instead of marching in regimented lines. Although they eat stinging fire ants, they also feed on beneficial insects such as ladybugs and honeybees.
Apiculturists say the ants don’t appear to be interested in the honey; they’re after the brood. They invade the honeycomb cell, dine on larvae then lay their own eggs.
by the associated press
The range of the so-called Rasberry crazy ant has more than doubled in the past year, swarming in 11 counties beginning near Houston and moving north, scientists say.
"It really is spreading at an alarming rate and we need to do research now,” said Danny McDonald, a Texas A&M University doctoral student who is examining the tiny creature’s biology and ecology. "There’s no time to wait.”
But serious research requires serious dollars.
The Texas Department of Agriculture and U.S. Department of Agriculture will fund in-depth research, but only if the ant gets the pest classification. And to do that, state officials say more research must be done. It’s a sticky Catch-22.
"This is absolutely idiotic,” said Tom Rasberry, the exterminator for whom the ant is named because he fought against them early on. "If killing honeybees does not put it in the ag pest category, I don’t know what does.”
Emerging by the billions during the warm, humid season, the reddish-brown insect is at its peak in August and September and appears resistant to over-the-counter ant killers. They are believed to have arrived in cargo through the port of Houston.
The ants — formally known as "paratrenicha species near pubens” — are called "crazy” because they wander erratically instead of marching in regimented lines. Although they eat stinging fire ants, they also feed on beneficial insects such as ladybugs and honeybees.
Apiculturists say the ants don’t appear to be interested in the honey; they’re after the brood. They invade the honeycomb cell, dine on larvae then lay their own eggs.
by the associated press
Airspeed sensor failures
WASHINGTON — On at least a dozen recent flights by U.S. jetliners, malfunctioning equipment made it impossible for pilots to know how fast they were flying, federal investigators have discovered. A similar breakdown is believed to have played a role in the Air France crash into the Atlantic that killed all 228 people aboard in June.
The discovery suggests the equipment problems are more widespread than previously believed. And it gives new urgency to airlines already scrambling to replace air sensors and figure out how the errors went undetected despite safety systems.
The equipment failures, all involving Northwest Airlines Airbus A330s, were brief and were noticed only after safety officials began investigating the Air France crash — on a Rio de Janeiro to Paris flight — and two other recent in-flight malfunctions. The failures were described by people familiar with the investigation who spoke only on condition of anonymity because they were not authorized to comment publicly.
Air pressure readings
While a car’s speedometer uses tire rotation to calculate speed, an airplane relies on sensors known as Pitot tubes to measure changing air pressure. Computers interpret that information as speed. A car’s broken speedometer might be little more than an inconvenience, but many airplane control systems rely on accurate speed information to work properly.
Like the fatal Air France flight, the newly dis- covered Northwest incidents and the two other malfunctions under investigation all involved planes with sensors made by the European electronics giant Thales Corp.
The Air France crash called into question the reliability of the sensors and touched off a rush by airlines to replace them.
Many companies, however, simply replaced them with another Thales model. As it became clear the problem was more widespread, Airbus and European regulators told companies to replace at least two of the three sensors on each plane with models made by North Carolina-based Goodrich Corp. The planes are allowed to continue flying while the switch is made.
Thales officials declined to comment. The company has previously said its sensors were made to Airbus specifications.
Data found in merger
The Northwest incidents were discovered when Delta Air Lines, which merged with Northwest last year, reviewed archived flight data for its fleet of 32 Airbus A330s, the people close to the inquiry said. All the planes involved landed safely.
Aviation experts said the discovery could provide clues to what caused Air France Flight 447 to crash into the Atlantic June 1, and what might be done to prevent future tragedies.
French investigators have focused on the possibility that Flight 447’s sensors iced over and sent false speed information to the computers as the plane ran into a thunderstorm at about 35,000 feet.
Three weeks after the crash, the U.S. National Transportation Safety Board began investigating two other A330 flights that experienced a loss of airspeed data.
The most recent was on June 23, when a Northwest flight hit rain and turbulence while on autopilot outside of Kagoshima, Japan. According to an NTSB report, speed data began to fluctuate. The plane alerted pilots it was going too fast.
Autopilot and other systems began shutting down, putting nearly all the plane’s control in the hands of the pilot, something that usually happens only in emergencies.
by the associated press
The discovery suggests the equipment problems are more widespread than previously believed. And it gives new urgency to airlines already scrambling to replace air sensors and figure out how the errors went undetected despite safety systems.
The equipment failures, all involving Northwest Airlines Airbus A330s, were brief and were noticed only after safety officials began investigating the Air France crash — on a Rio de Janeiro to Paris flight — and two other recent in-flight malfunctions. The failures were described by people familiar with the investigation who spoke only on condition of anonymity because they were not authorized to comment publicly.
Air pressure readings
While a car’s speedometer uses tire rotation to calculate speed, an airplane relies on sensors known as Pitot tubes to measure changing air pressure. Computers interpret that information as speed. A car’s broken speedometer might be little more than an inconvenience, but many airplane control systems rely on accurate speed information to work properly.
Like the fatal Air France flight, the newly dis- covered Northwest incidents and the two other malfunctions under investigation all involved planes with sensors made by the European electronics giant Thales Corp.
The Air France crash called into question the reliability of the sensors and touched off a rush by airlines to replace them.
Many companies, however, simply replaced them with another Thales model. As it became clear the problem was more widespread, Airbus and European regulators told companies to replace at least two of the three sensors on each plane with models made by North Carolina-based Goodrich Corp. The planes are allowed to continue flying while the switch is made.
Thales officials declined to comment. The company has previously said its sensors were made to Airbus specifications.
Data found in merger
The Northwest incidents were discovered when Delta Air Lines, which merged with Northwest last year, reviewed archived flight data for its fleet of 32 Airbus A330s, the people close to the inquiry said. All the planes involved landed safely.
Aviation experts said the discovery could provide clues to what caused Air France Flight 447 to crash into the Atlantic June 1, and what might be done to prevent future tragedies.
French investigators have focused on the possibility that Flight 447’s sensors iced over and sent false speed information to the computers as the plane ran into a thunderstorm at about 35,000 feet.
Three weeks after the crash, the U.S. National Transportation Safety Board began investigating two other A330 flights that experienced a loss of airspeed data.
The most recent was on June 23, when a Northwest flight hit rain and turbulence while on autopilot outside of Kagoshima, Japan. According to an NTSB report, speed data began to fluctuate. The plane alerted pilots it was going too fast.
Autopilot and other systems began shutting down, putting nearly all the plane’s control in the hands of the pilot, something that usually happens only in emergencies.
by the associated press
27 reported ill in ground beef recall
VISALIA, Calif. — Health officials in three states say at least 27 people have reported illnesses tied to recalled ground beef that may be tainted with salmonella.
Thursday, Fresno-based Beef Packers Inc. recalled 825,769 pounds of ground beef produced from June 5 to June 23.
The U.S. Department of Agriculture’s Food Safety and Inspection Service says the beef was sent to retail distribution centers in Arizona, California, Colorado and Utah.
The department said Friday that California, Colorado and Wyoming have reported illness that may be linked to the recall.
Colorado health officials say 21 people there have been sickened. All are recovering.
California officials say five people have reported feeling sick. The total number of people ill in Wyoming is unclear.
The beef was repackaged and sold under different retail brand names, so customers are being urged to check with their local store to determine if they bought any of the beef.
A separate recall last month involved beef tied to the hospitalization of 12 people in a possible E. coli outbreak. That meat was produced in Colorado.
Thursday, Fresno-based Beef Packers Inc. recalled 825,769 pounds of ground beef produced from June 5 to June 23.
The U.S. Department of Agriculture’s Food Safety and Inspection Service says the beef was sent to retail distribution centers in Arizona, California, Colorado and Utah.
The department said Friday that California, Colorado and Wyoming have reported illness that may be linked to the recall.
Colorado health officials say 21 people there have been sickened. All are recovering.
California officials say five people have reported feeling sick. The total number of people ill in Wyoming is unclear.
The beef was repackaged and sold under different retail brand names, so customers are being urged to check with their local store to determine if they bought any of the beef.
A separate recall last month involved beef tied to the hospitalization of 12 people in a possible E. coli outbreak. That meat was produced in Colorado.
Twitter outage Linked to attacks on blogger
NEW YORK — The outage that knocked Twitter offline for hours was traced to an attack on a lone blogger in the former Soviet republic of Georgia — but the collateral damage that left millions worldwide tweetless showed just how much havoc an isolated cyberdispute can cause.
"It told us how quickly many people really took Twitter into their hearts,” Robert Thompson, director of the Center for the Study of Popular Television at Syracuse University, said Friday.
Tens of millions of people have come to rely on social media to express their innermost thoughts and to keep up with world news and celebrity gossip.
Twitter "is one of those little amusements that infiltrated the mass behavior in some significant ways, so that when it went away, a lot of people really noticed it and missed it.”
The attacks Thursday also slowed down Facebook and caused problems for the online diary site LiveJournal.
But Twitter, the 140-character-or-less messaging site used by celebrities, businesses and even Iranian protesters, suffered a total outage that lasted several hours.
Those attacks continued Friday from thousands of computers pummeling its servers, said Kazuhiro Gomi, chief technology officer for NTT America Enterprise Hosting Services, which actually hosts Twitter’s service.
Twitter crashed because of a denial-of-service attack, in which hackers command scores of computers toward a single site at the same time to prevent legitimate traffic from getting through.
The attack was targeted at a blogger who goes by "Cyxymu” — the name of a town in Georgia — on several Web sites, including Twitter, Facebook and LiveJournal.
But they could have just as well targeted Twitter itself. That’s because the effects were the same whether the excess traffic went to the "twitter.com” home page or to the page for Cyxymu at "twitter.com/cyxymu.”
Same with Facebook and LiveJournal.
"A denial of service attack like this one is a very blunt instrument,” said Ray Dickenson, chief technology officer at Authentium, a computer security firm. It’s as if a viewer who didn’t like one show on an entire television channel decided to "knock out the whole station.”
Or like fishing with dynamite: You’ll catch something, but the blast will kill dolphins, sharks and other organisms, too.
Just who was behind these attacks is not yet clear, but the dispute was probably related to the ongoing political conflict between Russia and Georgia.
Gomi said the attacking computers were located around the world and the source of the attacks was not known.
by the associated press
"It told us how quickly many people really took Twitter into their hearts,” Robert Thompson, director of the Center for the Study of Popular Television at Syracuse University, said Friday.
Tens of millions of people have come to rely on social media to express their innermost thoughts and to keep up with world news and celebrity gossip.
Twitter "is one of those little amusements that infiltrated the mass behavior in some significant ways, so that when it went away, a lot of people really noticed it and missed it.”
The attacks Thursday also slowed down Facebook and caused problems for the online diary site LiveJournal.
But Twitter, the 140-character-or-less messaging site used by celebrities, businesses and even Iranian protesters, suffered a total outage that lasted several hours.
Those attacks continued Friday from thousands of computers pummeling its servers, said Kazuhiro Gomi, chief technology officer for NTT America Enterprise Hosting Services, which actually hosts Twitter’s service.
Twitter crashed because of a denial-of-service attack, in which hackers command scores of computers toward a single site at the same time to prevent legitimate traffic from getting through.
The attack was targeted at a blogger who goes by "Cyxymu” — the name of a town in Georgia — on several Web sites, including Twitter, Facebook and LiveJournal.
But they could have just as well targeted Twitter itself. That’s because the effects were the same whether the excess traffic went to the "twitter.com” home page or to the page for Cyxymu at "twitter.com/cyxymu.”
Same with Facebook and LiveJournal.
"A denial of service attack like this one is a very blunt instrument,” said Ray Dickenson, chief technology officer at Authentium, a computer security firm. It’s as if a viewer who didn’t like one show on an entire television channel decided to "knock out the whole station.”
Or like fishing with dynamite: You’ll catch something, but the blast will kill dolphins, sharks and other organisms, too.
Just who was behind these attacks is not yet clear, but the dispute was probably related to the ongoing political conflict between Russia and Georgia.
Gomi said the attacking computers were located around the world and the source of the attacks was not known.
by the associated press
Fewer layoffs might give companies and consumers new confidence
WASHINGTON — Finally, a lot fewer workers are hearing the dreaded words, "You’re fired.”
In the clearest sign yet that the recession is ending, layoffs slowed dramatically in July, the jobless rate dipped for the first time in 15 months and workers’ hours and pay edged upward.
Those are the kinds of figures that could give Americans the psychological boost necessary for recovery to take root after the worst recession since World War II.
A net total of 247,000 jobs were lost last month, the fewest in a year and a drastic improvement from the 443,000 jobs that vanished in June.
The Labor Department’s report Friday showed that the unemployment rate dropped a notch to 9.4 percent in July, from 9.5 percent the previous month. Together with slight increases in the average workweek and wages, the new figures suggested the economy is in a transition from recession to recovery.
"The worst may be behind us,” President Barack Obama declared. "Today, we’re pointed in the right direction.”
Still, the job market remains shaky.
A quarter-million lost jobs are a far cry from the employment growth needed to put the national economy on solid footing.
When the economy is healthy, employers need to add a net total of about 125,000 jobs a month to keep the unemployment rate stable. And to push the jobless rate down to a more normal 5 percent, it would take stronger growth — at least 200,000 new jobs a month. Economists say it might take until 2013 to drive down the unemployment rate to 5 percent.
Yet the improvements in July could give some businesses the confidence to hire again — or at least not to lay off more workers. And consumers, less anxious about losing jobs, could respond by spending more freely.
"If people and companies think the worst is behind them — and it probably is — their confidence will be restored,” said Richard Yamarone, economist at Argus Research. "That confidence can feed on itself.”
On Wall Street, the report propelled stocks higher. The Dow Jones industrial average jumped 114 points, and other stock averages also gained.
Analysts had been forecasting bleaker employment figures: more job losses and an increase in the unemployment rate to 9.6 percent.
The White House said the president still expects the rate to hit 10 percent this year. So do many economists and the Federal Reserve.
The worst may be behind us.”
President Barack Obama
by the associated press
In the clearest sign yet that the recession is ending, layoffs slowed dramatically in July, the jobless rate dipped for the first time in 15 months and workers’ hours and pay edged upward.
Those are the kinds of figures that could give Americans the psychological boost necessary for recovery to take root after the worst recession since World War II.
A net total of 247,000 jobs were lost last month, the fewest in a year and a drastic improvement from the 443,000 jobs that vanished in June.
The Labor Department’s report Friday showed that the unemployment rate dropped a notch to 9.4 percent in July, from 9.5 percent the previous month. Together with slight increases in the average workweek and wages, the new figures suggested the economy is in a transition from recession to recovery.
"The worst may be behind us,” President Barack Obama declared. "Today, we’re pointed in the right direction.”
Still, the job market remains shaky.
A quarter-million lost jobs are a far cry from the employment growth needed to put the national economy on solid footing.
When the economy is healthy, employers need to add a net total of about 125,000 jobs a month to keep the unemployment rate stable. And to push the jobless rate down to a more normal 5 percent, it would take stronger growth — at least 200,000 new jobs a month. Economists say it might take until 2013 to drive down the unemployment rate to 5 percent.
Yet the improvements in July could give some businesses the confidence to hire again — or at least not to lay off more workers. And consumers, less anxious about losing jobs, could respond by spending more freely.
"If people and companies think the worst is behind them — and it probably is — their confidence will be restored,” said Richard Yamarone, economist at Argus Research. "That confidence can feed on itself.”
On Wall Street, the report propelled stocks higher. The Dow Jones industrial average jumped 114 points, and other stock averages also gained.
Analysts had been forecasting bleaker employment figures: more job losses and an increase in the unemployment rate to 9.6 percent.
The White House said the president still expects the rate to hit 10 percent this year. So do many economists and the Federal Reserve.
The worst may be behind us.”
President Barack Obama
by the associated press
Wednesday, August 5, 2009
Fairs attract record attendance
CHARLESTON, W. Va. — Fun-seekers venturing out to farm fairs, art festivals and other mainstays of the American summer are finding either crowds or cancellation notices this year — and sometimes for the same reason.
Many festivals have met their demise when national sponsors pulled away and lawmakers slashed grant budgets, leaving organizers without enough money to buy tables, tents, portable toilets and other fair basics. That has many wondering whether their events will ever mount a comeback, though the ones that downsize stand a better chance than the ones that cancel entirely.
The survivors have trimmed endeavors and expenses, with many receiving record crowds eager for a recession-inspired "staycation.”
"It’s going to be Darwinian,” said to Ira Rosen, who runs Entertainment on Location, a festival and event production service. "The ones who can survive are going to be stronger, because now they have to watch every nickel and dime, and there’s going to be less competition.”
The flip side of that gloom is that fairs have weathered past recessions well. For every event cutting back or canceling this year, there seems to be another with happy crowds shelling out for corn dogs, concerts and rides.
"The trend really is people vacationing here in their backyard,” said Eiron Smith, a spokeswoman for Watkins Glen International Raceway in New York, which just wrapped up the 12th Finger Lakes Wine Festival.
Watkins Glen, which owns the festival, spent less selling itself to other states and more on marketing at home, Smith said, and was rewarded with a 10 percent increase in attendance over 2008.
Typically, the festival draws about 20,000.
When Gov. Ted Strickland opened the 156th annual Ohio State Fair this week, he called it a way for families to enjoy a "staycation.” State fair spokeswoman Christina Leeds said the event attracted 227,719 people during the first four days of its 12-day run.
The 17-day Alameda County Fair in California drew more than 432,000 people in July — 1,000 more than the previous attendance record, set in 1997. Other fairs in California and Wisconsin have also drawn record crowds, said Marla Calico, director of grants and special education for the International Association of Fairs and Expositions, which has 1,300 member events.
Bigger crowds are common during economic downturns, Calico said.
"There’s almost a pent-up demand for some- thing fun,” she said. "It’s a nice escape.”
by the associated press
Many festivals have met their demise when national sponsors pulled away and lawmakers slashed grant budgets, leaving organizers without enough money to buy tables, tents, portable toilets and other fair basics. That has many wondering whether their events will ever mount a comeback, though the ones that downsize stand a better chance than the ones that cancel entirely.
The survivors have trimmed endeavors and expenses, with many receiving record crowds eager for a recession-inspired "staycation.”
"It’s going to be Darwinian,” said to Ira Rosen, who runs Entertainment on Location, a festival and event production service. "The ones who can survive are going to be stronger, because now they have to watch every nickel and dime, and there’s going to be less competition.”
The flip side of that gloom is that fairs have weathered past recessions well. For every event cutting back or canceling this year, there seems to be another with happy crowds shelling out for corn dogs, concerts and rides.
"The trend really is people vacationing here in their backyard,” said Eiron Smith, a spokeswoman for Watkins Glen International Raceway in New York, which just wrapped up the 12th Finger Lakes Wine Festival.
Watkins Glen, which owns the festival, spent less selling itself to other states and more on marketing at home, Smith said, and was rewarded with a 10 percent increase in attendance over 2008.
Typically, the festival draws about 20,000.
When Gov. Ted Strickland opened the 156th annual Ohio State Fair this week, he called it a way for families to enjoy a "staycation.” State fair spokeswoman Christina Leeds said the event attracted 227,719 people during the first four days of its 12-day run.
The 17-day Alameda County Fair in California drew more than 432,000 people in July — 1,000 more than the previous attendance record, set in 1997. Other fairs in California and Wisconsin have also drawn record crowds, said Marla Calico, director of grants and special education for the International Association of Fairs and Expositions, which has 1,300 member events.
Bigger crowds are common during economic downturns, Calico said.
"There’s almost a pent-up demand for some- thing fun,” she said. "It’s a nice escape.”
by the associated press
June shows slight gain
WASHINGTON — As gasoline prices rose, Americans spent more in June than in May — despite falling incomes. For the rest of the year, economists expect falling wages and rising unemployment to act as a drag on spending.
Consumer spending is closely watched because it accounts for about 70 percent of economic activity and has helped lift the economy out of previous recessions. While analysts expect the economy to grow in the second half of this year, consumers aren’t likely to lead the way.
Americans boosted their spending 0.4 percent in June, the Commerce Department said Tuesday, the second consecutive monthly increase. But adjusting for inflation, spending fell 0.1 percent, following a flat reading in May. Inflation-adjusted spending hasn’t increased since February, the department said.
Personal income, meanwhile, dropped 1.3 percent in June, the eighth straight decline and steepest fall in four years. Incomes were inflated in May due to one-time payments from the Obama administration’s stimulus program. But wages and salaries also fell 0.4 percent in June.
"The key message is that … income remains weak” and consumers are likely to keep saving more, Paul Dales, U.S. economist at Capital Economics, wrote in a note to clients. "Under those circumstances, we expect spending to remain muted for some time.”
Gasoline prices peaked June 22 after rising nearly every day for two months. A price index included in the income and spending report showed overall prices rose 0.5 percent in June, but were up only 0.2 percent when food and energy are excluded.
by the associated press
Consumer spending is closely watched because it accounts for about 70 percent of economic activity and has helped lift the economy out of previous recessions. While analysts expect the economy to grow in the second half of this year, consumers aren’t likely to lead the way.
Americans boosted their spending 0.4 percent in June, the Commerce Department said Tuesday, the second consecutive monthly increase. But adjusting for inflation, spending fell 0.1 percent, following a flat reading in May. Inflation-adjusted spending hasn’t increased since February, the department said.
Personal income, meanwhile, dropped 1.3 percent in June, the eighth straight decline and steepest fall in four years. Incomes were inflated in May due to one-time payments from the Obama administration’s stimulus program. But wages and salaries also fell 0.4 percent in June.
"The key message is that … income remains weak” and consumers are likely to keep saving more, Paul Dales, U.S. economist at Capital Economics, wrote in a note to clients. "Under those circumstances, we expect spending to remain muted for some time.”
Gasoline prices peaked June 22 after rising nearly every day for two months. A price index included in the income and spending report showed overall prices rose 0.5 percent in June, but were up only 0.2 percent when food and energy are excluded.
by the associated press
Climate experts not for Cash for Clunkers
WASHINGTON — Cash for Clunkers could have the same effect on global warming pollution as shutting down the entire country — every automobile, every factory, every power plant — for an hour per year.
That could rise to three hours if the program is extended by Congress and remains as popular as it is now.
Climate experts aren’t impressed.
Compared to overall carbon dioxide emissions in the United States, the pollution savings from Cash for Clunkers do not noticeably move the fuel gauge. Environmental experts say the program — conceived primarily to stimulate the economy — is not an effective way to influence climate change.
"As a carbon dioxide policy, this is a terribly wasteful thing to do,” said Henry Jacoby, a professor of management and co-director of the Joint Program on the Science and Policy of Global Change at MIT. "The amount of carbon you are saving per federal expenditure is very, very small.”
Officials expect a quarter-million gasoline guzzling vehicles will be junked under the original $1 billion set aside by Congress — money that is now all but exhausted.
Calculations by The Associated Press, using Transportation Department figures, show that replacing those fuel hogs will reduce carbon dioxide emissions by just under 700,000 tons a year. While that may sound impressive, it’s nothing compared to what the U.S. spewed last year: nearly 6.4 billion tons (and that was down from previous years).
That means on average, every hour, America emits 728,000 tons of carbon dioxide. The total savings per year from Cash for Clunkers translates to about 57 minutes of America’s output of the chief greenhouse gas.
Likewise, America will be using nearly 72 million fewer gallons of gasoline a year because of the program, based on the first quarter-million vehicles replaced. U.S. drivers go through that amount of gas every 4
hours, according to the Energy Department.
by the associated press
That could rise to three hours if the program is extended by Congress and remains as popular as it is now.
Climate experts aren’t impressed.
Compared to overall carbon dioxide emissions in the United States, the pollution savings from Cash for Clunkers do not noticeably move the fuel gauge. Environmental experts say the program — conceived primarily to stimulate the economy — is not an effective way to influence climate change.
"As a carbon dioxide policy, this is a terribly wasteful thing to do,” said Henry Jacoby, a professor of management and co-director of the Joint Program on the Science and Policy of Global Change at MIT. "The amount of carbon you are saving per federal expenditure is very, very small.”
Officials expect a quarter-million gasoline guzzling vehicles will be junked under the original $1 billion set aside by Congress — money that is now all but exhausted.
Calculations by The Associated Press, using Transportation Department figures, show that replacing those fuel hogs will reduce carbon dioxide emissions by just under 700,000 tons a year. While that may sound impressive, it’s nothing compared to what the U.S. spewed last year: nearly 6.4 billion tons (and that was down from previous years).
That means on average, every hour, America emits 728,000 tons of carbon dioxide. The total savings per year from Cash for Clunkers translates to about 57 minutes of America’s output of the chief greenhouse gas.
Likewise, America will be using nearly 72 million fewer gallons of gasoline a year because of the program, based on the first quarter-million vehicles replaced. U.S. drivers go through that amount of gas every 4
hours, according to the Energy Department.
by the associated press
Prairie grouse protections could threaten wind energy in Oklahoma
LUBBOCK, Texas — A little prairie grouse could give the wind energy industry big fits in Texas, Oklahoma and three other states.
Should the lesser prairie chicken become listed as threatened or endangered — and it’s close now — there would be significant restrictions on companies hoping to plant towering turbines across a five-state region believed to have some of the nation’s best wind energy potential.
"We’ve never seen the likes of this,” said Texas Parks and Wildlife Department wildlife biologist Heather Whitlaw, who is part of conservation efforts with the other states and believes the bird could be listed within two years. "Anybody who puts anything on our landscape would be evaluated in one form or another.”
Scientists believe the prairie chicken population has dropped 80 percent nationally since 1963, the result of habitat loss and fragmentation, population isolation, drought and changes in land usage.
They once numbered about 3 million across an area that stretches through eastern New Mexico, eastern Colorado, western Kansas, northwest Oklahoma, and in parts of the Texas Panhandle and South Plains. Estimates show their population now at about 30,000.
The birds’ habitat could shrink further beginning in September when 1.3 million acres in the five-state area come out of a federal land conservation program started about 25 years ago. Farmers and ranchers may then use the land as they wish — which could include crop cultivation that would eliminate more of the bird’s breeding and nesting grounds.
Their habitats also lie in areas with plentiful and strong wind resources — where energy companies are eager to build.
The companies, which have been criticized before over the number of birds and bats killed by flying into the blades of wind turbines, are being more careful about where they put wind farms, said Laurie Jodziewicz, a spokeswoman for the American Wind Energy Association.
A tall threat
For the lesser prairie chicken, it’s not about the blades — it’s about size.
The shortflight bird, which weighs about 400 grams, has an aversion to tall structures around its breeding and nesting grounds because its predators include raptors who perch in high places awaiting their opportunity.
For about five years the wind industry generally has not heeded a 2004 recommendation from the U.S. Fish and Wildlife Service asking companies not to put turbines within 5 miles of a lek, the lesser prairie chickens’ breeding grounds. The American Wind Energy Association has asked for the scientific basis of the 5-mile limit.
"We still have not seen anything that looked at prairie grouse and leks and wind turbines,” Jodziewicz said. "I don’t know that (any wind company) is” looking at the 5-mile limit.
The lesser prairie chicken should have been listed as threatened or endangered 10 years ago, said Mark Salvo with the Sante Fe, N.M.-based group WildEarth Guardians, which filed a listing petition for it in the mid-1990s.
Restoring the prairie chicken population "will be much more difficult now” even if it is listed, he said. Moreover, as developers "slice and dice the habitat into ever smaller spaces,” Salvo said, other plants and animals that depend on that kind of habitat also will suffer.
"It’s already a relatively small landscape and it’s getting smaller,” he said. "We are in an emergency situation here.”
by the associated press
Should the lesser prairie chicken become listed as threatened or endangered — and it’s close now — there would be significant restrictions on companies hoping to plant towering turbines across a five-state region believed to have some of the nation’s best wind energy potential.
"We’ve never seen the likes of this,” said Texas Parks and Wildlife Department wildlife biologist Heather Whitlaw, who is part of conservation efforts with the other states and believes the bird could be listed within two years. "Anybody who puts anything on our landscape would be evaluated in one form or another.”
Scientists believe the prairie chicken population has dropped 80 percent nationally since 1963, the result of habitat loss and fragmentation, population isolation, drought and changes in land usage.
They once numbered about 3 million across an area that stretches through eastern New Mexico, eastern Colorado, western Kansas, northwest Oklahoma, and in parts of the Texas Panhandle and South Plains. Estimates show their population now at about 30,000.
The birds’ habitat could shrink further beginning in September when 1.3 million acres in the five-state area come out of a federal land conservation program started about 25 years ago. Farmers and ranchers may then use the land as they wish — which could include crop cultivation that would eliminate more of the bird’s breeding and nesting grounds.
Their habitats also lie in areas with plentiful and strong wind resources — where energy companies are eager to build.
The companies, which have been criticized before over the number of birds and bats killed by flying into the blades of wind turbines, are being more careful about where they put wind farms, said Laurie Jodziewicz, a spokeswoman for the American Wind Energy Association.
A tall threat
For the lesser prairie chicken, it’s not about the blades — it’s about size.
The shortflight bird, which weighs about 400 grams, has an aversion to tall structures around its breeding and nesting grounds because its predators include raptors who perch in high places awaiting their opportunity.
For about five years the wind industry generally has not heeded a 2004 recommendation from the U.S. Fish and Wildlife Service asking companies not to put turbines within 5 miles of a lek, the lesser prairie chickens’ breeding grounds. The American Wind Energy Association has asked for the scientific basis of the 5-mile limit.
"We still have not seen anything that looked at prairie grouse and leks and wind turbines,” Jodziewicz said. "I don’t know that (any wind company) is” looking at the 5-mile limit.
The lesser prairie chicken should have been listed as threatened or endangered 10 years ago, said Mark Salvo with the Sante Fe, N.M.-based group WildEarth Guardians, which filed a listing petition for it in the mid-1990s.
Restoring the prairie chicken population "will be much more difficult now” even if it is listed, he said. Moreover, as developers "slice and dice the habitat into ever smaller spaces,” Salvo said, other plants and animals that depend on that kind of habitat also will suffer.
"It’s already a relatively small landscape and it’s getting smaller,” he said. "We are in an emergency situation here.”
by the associated press
Senators from Oklahoma , oppose ‘clunkers’ extension
WASHINGTON — Oklahoma’s senators said Tuesday that they oppose extending the government’s Cash for Clunkers program.
Sen. Jim Inhofe called it a "regressive tax.”
Inhofe and Sen. Tom Coburn, both Republicans, criticized the program on the same day Senate Majority Leader Harry Reid said the Senate will vote this week on adding $2 billion to the $1 billion already spent. Reid, D-Nev., said there are enough votes to approve the program’s extension.
The House last week overwhelmingly approved the extension, directing that money be taken from stimulus funds.
Inhofe said Tuesday, "On the surface, the Cash for Clunkers program may seem like a good idea. However, closer examination highlights why government should not get into the business of running businesses. It just doesn’t work.”
Steve Rankin, president of the Oklahoma Automobile Dealers Association, said Monday that the program — which offers rebates up to $4,500 for trading in used cars and sport utility vehicles for vehicles that get better mileage — had generated a lot of interest, along with a lot of headaches.
"Our main concern now is just that (dealers) get paid” for the cars they’ve sold through the program, Rankin said.
Dealers have had serious problems trying to process their sales on the government Web site, Rankin said. He said the office manager for one car dealer had worked through the night this past weekend trying to process the 60 sales made through the program and was able to complete only two.
"It’s a laborious process,” Rankin said. "It’s hard to get through.”
Rankin said many dealers had invested advertising money connected to the program, on top of the price reductions they had made in anticipating the government payments. Now, he said, they’re worried about getting their reimbursements.
Though the program has drawn praise from the National Automobile Dealers Association and many lawmakers for moving cars off of dealer lots, Inhofe cited estimates that only 50,000 cars had been sold that wouldn’t have otherwise.
"That means that taxpayers have spent $20,000 for each additional sale,” said Inhofe, of Tulsa. "The program simply feeds the myth that the government offers something for nothing when in reality, the program acts as a regressive tax. By mandating that dealers destroy perfectly good cars that are traded in, the used car market has less supply, meaning higher costs. This means that many Americans who, even with the government incentive, cannot afford to purchase a new car will end up being charged more when trying to purchase a used car. This program should be ended, not extended.”
Coburn said farmers were going to their barns to get pickups to trade in through the program.
"Americans aren’t stupid,” he said.
But he said Congress didn’t have the money to fund the program.
"We’re going to steal it from our children,” said Coburn, of Muskogee.
Coburn spokesman John Hart said the senator hopes to be able to offer amendments to the $2 billion extension "dealing with the cost and the structure of the program.”
from the oklahoma
Sen. Jim Inhofe called it a "regressive tax.”
Inhofe and Sen. Tom Coburn, both Republicans, criticized the program on the same day Senate Majority Leader Harry Reid said the Senate will vote this week on adding $2 billion to the $1 billion already spent. Reid, D-Nev., said there are enough votes to approve the program’s extension.
The House last week overwhelmingly approved the extension, directing that money be taken from stimulus funds.
Inhofe said Tuesday, "On the surface, the Cash for Clunkers program may seem like a good idea. However, closer examination highlights why government should not get into the business of running businesses. It just doesn’t work.”
Steve Rankin, president of the Oklahoma Automobile Dealers Association, said Monday that the program — which offers rebates up to $4,500 for trading in used cars and sport utility vehicles for vehicles that get better mileage — had generated a lot of interest, along with a lot of headaches.
"Our main concern now is just that (dealers) get paid” for the cars they’ve sold through the program, Rankin said.
Dealers have had serious problems trying to process their sales on the government Web site, Rankin said. He said the office manager for one car dealer had worked through the night this past weekend trying to process the 60 sales made through the program and was able to complete only two.
"It’s a laborious process,” Rankin said. "It’s hard to get through.”
Rankin said many dealers had invested advertising money connected to the program, on top of the price reductions they had made in anticipating the government payments. Now, he said, they’re worried about getting their reimbursements.
Though the program has drawn praise from the National Automobile Dealers Association and many lawmakers for moving cars off of dealer lots, Inhofe cited estimates that only 50,000 cars had been sold that wouldn’t have otherwise.
"That means that taxpayers have spent $20,000 for each additional sale,” said Inhofe, of Tulsa. "The program simply feeds the myth that the government offers something for nothing when in reality, the program acts as a regressive tax. By mandating that dealers destroy perfectly good cars that are traded in, the used car market has less supply, meaning higher costs. This means that many Americans who, even with the government incentive, cannot afford to purchase a new car will end up being charged more when trying to purchase a used car. This program should be ended, not extended.”
Coburn said farmers were going to their barns to get pickups to trade in through the program.
"Americans aren’t stupid,” he said.
But he said Congress didn’t have the money to fund the program.
"We’re going to steal it from our children,” said Coburn, of Muskogee.
Coburn spokesman John Hart said the senator hopes to be able to offer amendments to the $2 billion extension "dealing with the cost and the structure of the program.”
from the oklahoma
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