The Federal Reserve’s decision to bail out the investment bank Bear Stearns is coming under criticism from housing advocates who say the Bush administration has done too little to help homeowners facing foreclosure. Over the weekend, the Fed took extraordinary measures to help JPMorgan purchase Bear Stearns and save the nation’s fifth largest investment bank from collapse. As part of the deal, the Fed put up $30 billion to guarantee Bear Stearns riskiest investments. Jim Carr of the National Community Reinvestment Coalition said, "It’s almost stunning to witness the shoring up of a major financial institution, but not addressing the problem that the quality of housing assets is deteriorating with each minute we wait."
On Monday, reporters questioned White House Press Secretary Dana Perino about the bailout.
Reporter: "But people who are facing, say, foreclosures, individuals, the little guys who are facing their foreclosure, are looking at the big guys getting government, if not brokered, certainly they’re overseeing deals that are engineered to sort of keep the big picture financial community afloat, and they’re saying, well, where’s my boost of liquidity?"
Dana Perino: "They’re going to get that boost of liquidity in the form of a stimulus package and a tax rebate that’s coming to them the second week of May."
bq.Reporter: "But that’s not going to save their houses."
President Bush praised the Federal Reserve’s actions.
President Bush: "One thing is for certain: we’re in challenging times. But another thing is for certain, that we’ve taken strong and decisive action. The Federal Reserve has moved quickly to bring order to the financial markets. Secretary Paulson has been — is supportive of that action, as am I. And I want to thank you, Mr. Secretary, for working over the weekend…"
Concern is also growing that other investment banks could face possible collapse. On Monday, shares in Lehman Brothers plunged 20 percent, its biggest-ever one-day fall. The Federal Reserve has reportedly urged other leading financial institutions to support Lehman Brothers in order to prevent a further economic crisis.
Market analyst James Hughes: "What the fears are, that the other banks which maybe haven’t written down so much, the fear is that they’re hiding these subprime mortgage issues, and maybe 'hiding' is the wrong word, but they’re putting them somewhere else, so we don’t necessarily get the whole picture. But, unfortunately, these things will come out, and that is the fear, that there’s going to be yet more writedowns and more problems coming along. And, of course, Bear Sterns is now turning into the US’s Northern Rock at the moment, and of course the fears are that there’s more going to go that way."
In other economic news, shareholders of a private equity firm connected to the Carlyle Group has voted to shut down the firm, Carlyle Capital, after the value of the fund collapsed.
Meanwhile, Alan Greenspan, the former chair of the Federal Reserve, said the current economic crisis is “likely to be judged in retrospect as the most wrenching since the end of the Second World War."
In Iraq, a female suicide bomber killed at least forty-two people near a mosque in Karbala Monday, while Vice President Dick Cheney was making a surprise visit to Iraq. Despite the ongoing violence, Cheney claimed the 2003 US invasion of Iraq has been a success.
Dick Cheney: "So if you reflect back on those five years, I think it’s been a difficult, challenging, but nonetheless successful endeavor and that we’ve come a long way in five years and that it’s been well worth the effort… I’m pleased to be able to return next week to Washington and report to the President that we are making significant progress in Iraq."
Republican presidential candidate John McCain shared a similar analysis based on his trip to Iraq.
Sen. John McCain: "We find a continued success of the strategy, continued training and equipping of the Iraqi military and them functioning more efficiently."
Amnesty International says the current human rights situation in Iraq is "disastrous." In a new report, Amnesty said, "Hundreds of people are being killed every month in the pervasive violence, while countless lives are threatened every day by poverty, cuts to power and water supplies, food and medical shortages, and rising violence against women and girls." The International Committee of the Red Cross warned Monday the humanitarian situation in Iraq remains among the most critical in the world. 27 million Iraqis have no functioning water or sanitation facilities. The Red Cross says Iraq’s healthcare system is now in its worst shape ever.
In campaign news, Florida Democrats have decided not to hold a do-over primary election, after voters responded negatively to a proposal for a vote-by-mail primary.
Meanwhile, efforts in Michigan to hold a re-vote have stalled.
Both states have already held their nominating contests, but the Democratic National Committee refuses to seat their delegates after they moved up their primary dates.
Senator Barack Obama is planning to give what has been described a major speech on race today. Obama is expected to repeat his denunciations of the Rev. Jeremiah Wright, Obama’s former pastor at the Trinity United Church of Christ in Chicago. On Friday, Obama removed Wright from his religious advisory committee and called some of Wright’s statements "inflammatory and appalling." Over the past week, Wright has been scrutinized in the media for praising Nation of Islam leader Louis Farrakhan, for linking the attacks of September 11 to US foreign policy in the Middle East, and for saying that the country was founded on racism. Obama has described Wright as his spiritual mentor. Wright married him and his wife, baptized their two daughters and blessed their Chicago house.
There has been a major development in the case of death row prisoner Troy Davis. On Monday, the Georgia Supreme Court refused to reopen his case and to allow him to present new evidence of his innocence. In 1991, Davis was convicted of murdering a white police officer, but since then many questions have been raised about his case. The murder weapon was never found. There’s no DNA evidence or other physical evidence. Seven of the nine non-police witnesses said they were coerced by police and have since recanted their testimony.
In media news, the Supreme Court has agreed to hear an appeal from the Federal Communications Commission on the use of vulgar words on the airwaves. Last year, a federal court sided with the nation’s four main television networks in a suit against the FCC’s expanded enforcement of the indecency law. The court ruled the FCC could not punish networks for broadcasting "fleeting expletives."
And finally, in New York, David Paterson has been sworn in as governor, replacing Eliot Spitzer. Paterson becomes New York’s first African American governor and the first blind governor in the country. During his speech Monday, Paterson made no mention of Spitzer.
bq.David Paterson: "Let me tell you a little about myself. I was born in the borough of Brooklyn. I was educated on Long Island. Harlem is my home. This is where I learned love for family and appreciation for community. I have confronted the prejudice of race and challenged the issues of my own disability. I have served in government for over two decades. I stand willing and able to lead this state to a brighter future and a better tomorrow. Let me reintroduce myself. I am David Paterson, and I am the Governor of New York State."
In what might be a first, Paterson admitted on his first day in office that he and his wife have had extramarital affairs. In an interview with Juan Gonzalez of the Daily News, Paterson and his wife acknowledged that they each had intimate relationships with others during a rocky period in their marriage several years ago.