In the wake of Standard and Poor's decision to downgrade the U.S. credit rating, and an economy still struggling to keep its head above water, the Federal Reserve decided yesterday to keep the nation's interest rate close to zero through 2013. The rate has been static for the past two years. The response on Wall Street seemed mixed. At first stocks took a bit of a dive, but they recovered. The Dow closed up 429 points yesterday after a late rally.
Stock markets went into a free-fall yesterday, witnessing drops reminiscent of the great economic collapse of 2008 that the world has still yet to recover from. The S&P 500 saw all of its stock fall and the Dow Jones industrials fell 634.76 points, the sixth worst drop in over a century. How informative is the S&P downgrade? What can we take from their assessment of Washington?
In an exclusive story in The New York Times this morning, Wall Street and finance reporter Louise Story writes that the behemoth insurance company American International Group Inc. is going to sue Bank of America, claiming the banking institution provided false information on mortgage bonds to AIG and ratings agencies, which lead to losses of more than $10 billion.
Standard and Poor’s downgrade of the United States' credit rating on Friday, for the first time in history, brought condemnation from government officials, and fears of market turmoil. S&P's managing editor, John Chambers, told ABC News' "This Week" that there was a one in three chance of a further downgrade. He also said that the U.S. could regain its AAA rating, but warned that it may take as long as two decades — if it happens at all.
U.S. markets are opening this morning after their worst day in almost three years. The Dow Jones index of thirty blue-chip stocks closed more than 500 points down, or 4.3 percent, the biggest one-day fall since late 2008. Indexes including the S&P 500 also plunged yesterday. The news reflects fears of a slowdown in global growth, concerns about Europe’s debt crisis, and the prospect of a double dip recession.
The federal government plans to release new unemployment figures on Friday. Will July's numbers be as dismal as June's? All week, The Takeaway is speaking with experts, employers, and out-of-work Americans about unemployment-related issues. Today, we're discussing foreign workers. With unemployment hovering around 9.2 percent, why do so many seasonal employers choose to hire workers from outside the U.S.?
While the country anxiously waits to see if lawmakers can raise the debt limit before the August 2 deadline, a few economists and financiers are emphasizing the importance of a long-term financial solution to the deficit, even if that results in a temporary default. They question the lasting effects of a default in terms of investor confidence, citing the reputation and dominance of U.S. currency in financial transactions.
Political negotiations on the debt ceiling are coming down to the wire. With just four days until the August 2 deadline, by which Congress must agree on a budget plan or default, House Speaker John Boehner delayed a vote on his debt ceiling legislation last night, after a long day of vote counting and arm-twisting failed to secure immediate support for his plan from conservative Republicans. The delay surprised the Democrats, who were expecting to kill the plan in the Senate, and move ahead with their own proposal.
As the deadline for increasing the nation's debt ceiling inches closer, individual states are getting ready for the possibility that the Treasury will run out of cash. According to the National Association of State Budget Officers, 35 percent of state budgets rely upon federal funding to keep programs like unemployment, Medicaid, transportation projects and highways running.
Despite plenty of drama and public rhetoric in the battle over the U.S. debt ceiling, President Obama and House Speaker John Boehner have not yet reached a compromise. The deadline is looming as is the possibility the country will have to default on its $14.3 trillion of debt. As time marches on, analysts are starting to think seriously about what would happen if no deal can be reached. A vote was expected today in the House on Boehner’s last bid to increase the debt limit and cut spending — but that all fell apart last night when Tea Party Republicans refused to vote for it.
Hundreds of thousands of homeowners who took out loans with Countrywide, and were overcharged for their loans when they fell behind on their payments can expect some money back soon. It's taken over a year for the Federal Trade Commission to figure out who will get parts of a $108 million settlement reached last summer with Countrywide. Countrywide will begin mailing checks today. Wells Fargo, the largest U.S. home lender, has also agreed to a steep fine of $85 million, for roping borrowers into costlier-than-necessary loans.
The Takeaway's Washington correspondent, Todd Zwillich, called it correctly on yesterday's show, saying that the Gang of Six — a bipartisan group of senators who have been trying to formulate a deficit-reduction plan for months — would make a comeback. President Obama praised praised the group's proposal yesterday, calling it a "very significant step" toward a budget negotiation.
We’re exactly two weeks away from the August 2 deadline for lawmakers to raise the nation’s debt ceiling. If Congress can’t come to an agreement by then, the U.S. may default on its loans, and that could likely mean losing our Aaa bond rating. But with debt ceiling negotiations seemingly at a standstill, Moody’s Investor Service has suggested eliminating the debt ceiling altogether.
China is weighing in on U.S. lawmakers' failure to make any meaningful progress on the government debt limit, during increasingly tense budget talks in the White House. China holds more than $1 trillion in U.S. Treasury securities, and a failure to reach a debt agreement would result in a credit downgrade for the United States, and devalue China’s holdings.
Responding to concerns that lawmakers in Washington will fail to reach an agreement on raising the country's debt threshold, credit ratings agency Moody's placed the U.S.'s credit rating under review for the first time since the federal government shutdown in 1995. The U.S. still risks losing the Aaa rating it has had since 1917, even if lawmakers come to a last minute agreement before the August 2 deadline.
The online retailer Amazon is getting into the ballot initiative business. The company is pushing for a referendum in California that would eliminate sales tax for online retailers that have a limited physical presence in the state.
Another shot has been fired in the ongoing negotiations between President Obama and Republican Congressional leaders to raise the nation's debt limit before the August 2 deadline. Obama challenged Republicans in a press conference on Monday, saying that it was time for the GOP to back up rhetoric about tackling the country's long-term debt problems. Republicans leaders have said they will seek a smaller deal with more cuts to social program and no tax increases on the wealthy. Lawmakers will return to the White House for more negotiations this afternoon.
As the economy continues to struggle, almost 14 million Americans remain unemployed. More than six million of those have been unemployed for more than half a year. Two weeks ago, we spoke with two small business owners, Frank Goodnight, President of Diversified Graphics in Salisbury, North Carolina, and Marva Allen, owner of the Hue Man Bookstore in Harlem. They weren’t hiring. Carla Emil hopes to change that, with a website she set up in February, OneJobForAmerica.org, which encourages American businesses to sign up to the website and publicly pledge to hire one more person.
Tens of thousands of Greeks are gathering in the streets of Athens today, as part of a 48-hour strike to protest an austerity package that includes deep spending cuts and higher taxes, and would need to pass in order for Greece to obtain a bail-out from the European Union. Parliament will vote on the austerity package tomorrow. Polls show eighty percent of Greeks are apposed to the package.
The federal agency overseeing Fannie Mae and Freddie Mac failed to act on almost 100 complaints filed from July 2008 to October 2010, pertaining to possible foreclosure abuse and mortgage fraud at the taxpayer-owned mortgage finance agencies. The companies did not refer the complaints to criminal investigators or other law-enforcement authorities, according to a report issued late Tuesday by the inspector general of the Federal Housing Finance Agency.