Housing help for unemployed, underwater borrowers and Oil falls on stronger dollar
Under pressure to do more for troubled homeowners, President Obama is expected to announce on Friday a $1.5 billion program to help borrowers in the five states hit hardest by the housing crisis.
The initiative calls for pumping money into state housing agencies in California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth.
Also, the agencies can assist homeowners having trouble securing loan modifications because of second liens, as well as promote affordable housing opportunities.
Obama is scheduled to unveil the initiative, which will be funded with money from the TARP bank bailout, at events in Nevada, which has the highest number of underwater homeowners at 65% and the nation’s second-highest unemployment rate at 13%.
The president will be joined by Senate Majority Leader Harry Reid, D-Nev., who is facing a tough relection campaign. [Read the full article]
Oil prices rebounded Friday on supply concern following strikes at French refineries, and after a report showed a dip in U.S. inflation.
What prices are doing: Crude oil for March delivery rose 75 cents to settle at $79.81 a barrel on Friday. Prices had fallen as low as $77.76 earlier in the session.
On Thursday, oil rose to its highest level in five weeks after an inventory report showed a larger-than-expected inventory drop in supplies of some refined products.
The oil market was closed Monday in the United States in observance of Presidents Day, but prices rose steadily throughout the remainder of the week. From Tuesday to Friday, crude prices gained 3.6%.
What’s driving prices: A stronger dollar kept oil prices in check early Friday, a day after the Federal Reserve raised the discount rate by a quarter percentage point to 0.75%. [Read the full article]
The dollar continued to gain broad support Friday from the Federal Reserve’s decision to raise its discount lending rate, as global stocks and commodity prices fell.
On Thursday the Fed increased the discount rate by a quarter of a percentage point to 0.75%. The rate will be effective beginning Friday.
However, the rate is not expected to impact the price of consumer loans — such as mortgages and credit card rates — because the discount rate is what the Fed charges banks for emergency short-term borrowing.
The Fed left its benchmark lending rate, which has a bigger impact on the price of consumer loans, near zero. And given the sluggish labor market and tepid economic recovery, the closely watched rate will remain near its historic low for the foreseeable future.
Still, the increase in the discount rate is a small sign that the Fed thinks the market can begin to stand on its own. That confidence is pushing the dollar higher. [Read the full article]
Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.
The Dow futures collapsed, after the Fed hiked its emergency rate, said David Jones, chief market strategist at IG Markets in London. They dropped 70 points in five minutes. So it’s really fallout from that.
The rate, known as the discount rate, is what the Fed charges banks that borrow from the central bank when they run short of funds.
The Fed doing this sort of thing is traditionally seen as the first warning sign that they are planning on tightening up their fiscal policy and the period of them supporting markets has come to an end," he said.
Having said that, U.S. stock futures have partly recovered from yesterday’s lows, and Jones said there’s still a chance that the decline in the stock market will be moderate. [Read the full article]