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The bailout launched at the height of the financial crisis in September 2008 will continue to exist for years, says a report issued Thursday by Christy Romero, the acting special inspector general for the $700 billion bailout. Some bailout programs, such as the effort to help homeowners avoid foreclosure by reducing mortgage payments, will last as late as 2017, costing the government an additional $51 billion or so.

The gyrating stock market has slowed the Treasury Department’s efforts to sell off its stakes in 458 bailed-out companies, the report says. They include insurer American International Group Inc., General Motors Co. and Ally Financial Inc.

If Treasury plans to sell its stock in the three companies at or above the price where taxpayers would break even on their investment – $28.73 a share for AIG, $53.98 for GM – it may take a long time for the market to rebound to that level, the report says. AIG’s shares closed Wednesday at $25.31, while GM ended at $24.92. Ally isn’t publicly traded.

It will also be challenging for the government to get out of the 458 companies as the market remains volatile and banks struggle keep afloat in the tough economy, it says.

Congress authorized $700 billion for the bailout of financial companies and automakers, and $413.4 billion was paid out. So far the government has recovered about $318 billion. The bailout is called the Troubled Asset Relief Program, or TARP.

“TARP is not over,” Romero said in a statement. She said her office will maintain its commitment to protect taxpayers for the duration of the program.

Treasury spokesman Matt Anderson said the department “has made substantial progress winding down TARP and has already recovered more than 77 percent of the funds disbursed for the program, through repayments and other income.”

“We’ll continue to balance the important goals of exiting our investments as soon as practicable and maximizing value for taxpayers,” Anderson said.

The government has unwound its investments in four of the companies that received the most aid: Bank of America Corp., Citigroup Inc., Chrysler Group LLC and Chrysler Financial, the automaker’s old lending arm.

On Wednesday, Treasury announced that it had sold the final batch of securities under its $368 million Small Business Administration loan program under TARP.

In Romero’s quarterly report to Congress, she said her office has uncovered and prevented fraud related to TARP. Investigations by her office have resulted in criminal charges against 10 people and three convictions, the report notes.

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One proposal gaining prominence would have countries cede some control over their budgets to a central European authority. In a measure of how rapidly the peril has grown, that idea would have been unthinkable even three months ago.

World stock markets, glimpsing hope that Europe might finally be shocked into stronger action, staged a big rally. The Dow Jones industrial average in New York rose almost 300 points. In France, stocks rose 5 percent, the most in a month.

More relevant to the crisis, borrowing costs for European nations stabilized. They had risen alarmingly in recent weeks – in Greece, then in Italy and Spain, then across the continent, including in Germany, the strongest economy in Europe.

The yields on benchmark bonds issued by Italy and Germany rose, but only by hundredths of a percentage point. The yield fell 0.1 percentage point on bonds of France, 0.14 points for those of Spain and 0.22 points for Belgium.

Allowing a central European authority to have some control over the budgets of sovereign nations would create a fiscal union in Europe in addition to the monetary union of the 17 countries that share the euro currency.

Some analysts have said would be a leap toward creating a United States of Europe. More delicately, it would force the nations of Europe to swallow their national pride, cede some sovereignty and agree to strengthen ties with their neighbors rather than fleeing the euro union during the crisis.

“The common currency has the problem that the monetary policy is joint, but the fiscal policy is not,” Germany’s finance minister, Wolfgang Schaeuble, said in a meeting with foreign reporters in Berlin.

The monetary union has existed since the euro was created in 1999, but the European Union, which includes the 17 euro nations and 10 others that use their own currencies, has no central authority over taxing and spending.

Countries like Ireland, Portugal, Spain, Greece and Italy overspent wildly for years and racked up annual budget deficits that have left them with monstrous debt. Italy holds euro1.9 trillion in debt, or 120 percent of the size of its economy.

A fiscal union could prevent excessive spending in the future. More important, it would be a step toward addressing today’s debt crisis: It could provide cover for the European Central Bank to stage a massive intervention in the European bond market to drive down borrowing costs and keep the debt crisis under control.

Enforced budget discipline might ease the ECB’s concerns about the concept known as moral hazard – essentially, that bailing out free-spending countries would only encourage them to do it again.

A fiscal union would also pose a practical problem – how to make such a body democratically accountable.

Another option is for the 17 nations in the euro group to sell bonds together, known as eurobonds, to help the countries in the deepest trouble because of debt. Germany has resisted such a plan, because it would raise borrowing costs for it and other nations that good credit ratings.

While Europe buzzed over the possible solutions, finance ministers of the euro nations prepared for a summit beginning Tuesday evening in Brussels, to be joined the following day by ministers from the rest of the European Union.

Italy readied an auction of bonds designed to raise euro8 billion, or about $10.6 billion – and steeled itself for the high interest rates it will have to pay.

In Washington, President Barack Obama huddled with European Union officials, and the White House insisted Europe alone was responsible for fixing its debt problems.

While Obama offered no specifics on how the U.S. might help, he said failing to resolve the debt crisis could damage the U.S. economy, which has grown slowly since the end of the recession in June 2009 and still has 9 percent unemployment.

“If Europe is contracting, or if Europe is having difficulties, then it’s much more difficult for us to create good here jobs at home,” Obama said at the conclusion of the day-long summit.

The euro appeared to be in increasing danger. Experts said the currency could fall apart within days without drastic action, with consequences rivaling those of the 2008 financial crisis.

“Everyone knows that if the eurozone crashes the consequences would be very dramatic and in the race after that there would no winners, just losers,” said Finland’s finance minister, Jutta Urpilainen.

For countries that decided to leave the euro group and return to their own sovereign currency, the conversion would be wrenching.

If Germany broke away, for example, its national currency could rise in value quickly because the German economy is stronger on its own than the European economy as a whole. But a stronger German mark would damage the German economy because Germany depends heavily on exports, and it would cost more for everyone else to buy German goods.

As for weaker countries that decided to leave, depositors would probably yank money out of their banks, fearing a plummeting currency. Savers would not want their euros replaced with, say, feeble Greek drachmas.

If countries tried to repay their old euro debts with their own currencies, they’d be considered in default and struggle to sell bonds in global financial markets. Corporations would face the same squeeze.

Overall, economists at UBS estimate, a weak country that left the eurozone would see its economy shrink by 50 percent.

Currency chaos and defaults by governments and companies would weaken European banks and also cause them to stop lending to each other. Because banks are connected globally, a credit freeze in Europe would spread. As it did in 2008, a credit freeze would cause stock markets to sell off worldwide, and another deep recession would probably follow.

I have heard all the arguments from the above asset classes and depending upon who you talk everyone seems to have an opinion about the best place to invest.

There is another area of investment which is not talked about as frequently. This area of investment has TREMENDOUS potential and almost unlimited upside.  Doubling, and tripling your investment in this area would be an enormous understatement.  “What is it?” you ask.

I will give you a clue…you wake up everyday and go to sleep in it.  You eat in it, you take your children to school in it, you attend block parties in it, and many of your family and friends may also live in it.  If you haven’t guessed by now, I am referring to the community.  That’s right…an investment in your community is the greatest investment you can make. By investing in the community, what are the returns for me, you ask? How does one invest in a community? There are many ways you can invest in your community. Let me explain.

Community Businesses

In your community, there are many businesses.  These businesses, if upheld, will bring respectable traffic to your community.  Restaurants, bakeries, schools, libraries, and more are all a reflection of the upkeep and character of the community.  Outsiders often get a sense of the community by the quality of service, experience and ambiance within the local community restaurants and other institutions.  The upkeep of the schools and libraries are all factors looked upon by drive-through visitors. Frequent investment is crucial to property value, and quality of living. Time and money that flows through these community institutions will always be reflected in the property values and ultimately the quality of life for the community’s residents.  So take time to eat in your community restaurants, donate books to your local libraries and schools, and frequent the stores and shops in your community.

Entrepreneurship

How large of a return did Bill Gates, Russell Simmons, or Oprah Winfrey get on their original dollars of investment?  The number is far too large for any ordinary calculator to hold.  Successful entrepreneurship has always been guaranteed to be one of the largest returns on your investment.  So I challenge you to open your own business in your own community.  Seek support from the community and they will often respond positively to your business endeavor.

Education is a key component of entrepreneurship.  Oftentimes an individual has not discovered his or her passion; they have not received the education that provides them with the knowledge and exposure to identify areas that will be most beneficial for them.  Investing in education is a key component to entrepreneurship in your community.  Flourish your mind, and your business will also flourish.

Youth

Investing in the youth of our communities will not only yield enormous returns but returns that are often the most immediate and most fulfilling.  The youth of our communities are crying out for our assistance and support.  The parents and the teachers need our assistance.  Seeing the smile on a youngster’s face – a smile that you helped to create – is one of the most personally rewarding experiences one can have. I personally spend a great deal of time with the youth in my community, and will always continue to do so because I continue to see so many positive results.  How many young Bob Johnsons, Warren Buffets, or Bill Clintons will never reach their potential because we didn’t take the time to invest in him or her?  I urge all to take some time to volunteer at the local school in your community and talk to the children.  Career days, tutor programs, after school programs, and more are all opportunities to stop by and spend some time with the children of your neighborhoods.  They are our future, and investment in their lives is also an investment in yours.

The bible says, “Neither shall the inheritance remove from one tribe to another tribe; but every one of the tribes of the children of Israel shall keep himself to his own inheritance.” (Numbers 36:9) What this means to me is that money made in the community should primarily be spent for the benefit of the community.  So I urge you to think about how you are contributing to your own communities.  If you are not active, then how can you get active?  Many people look to the politicians to create change, and often fail to realize that they can create positive change and movement right in their own communities.  How much time are you putting into the care and upkeep of your community?  Do you throw cigarette butts, chicken bones, and other trash on the streets, yards, or subway tracks?  Participate in your community, donate to your community (time and money), and most of all RESPECT your community.  It will go a long way for you, me, and the American society as a whole.

Written By: Ryan Mack, President of Optimum Capital Management, LLC

Email Questions and Comments to ryan@livinginthevillage.com

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Knowing how to improve your FICO score is one of the most important factors in clearing up your credit.  A FICO score is a three-digit number that determines the interest you will pay on your credit cards, home mortgage, and even determine whether you will get that new apartment. FICO, the Fair Isaac Corporation, single handedly created this three-digit number that will soon become the dictator of your livelihood in many ways. There are five elements of the FICO score. They are listed below along with their weight of importance.

1. Record of making timely bill payments………………………………………35%
2. Total balance on your credit cards and other loans compared to your total credit limit……………………………………………………………………..30%
3. Length of credit history………………………………..……………………15%
4. New accounts, recent loan applications, and credit inquiries..……………….10%
5. Mixture of credit cards and loans…………………………………….………10%

Pay Your Bills on Time: Always pay your bills on time.  There are no excuses for late payments.  As soon as I receive a bill, I pay it immediately.  It was a very difficult habit to establish, because instinct says to throw it on the dresser under a pile of other envelopes and avoid it like the plague.  Another bill paying strategy is to designate a day of the month where you do nothing but pay bills.  No matter what you are doing, stop and pay your bills.  The only downfall to this is that sometimes if you happen to miss that day, it leaves room for procrastination.  If the fixed monthly cycle is your preferred strategy, designating two days a month might be more appropriate.

Better still, just pay as they come.  One missed payment of a bill can lower your FICO score by 50 – 100 points.  If you miss a month of payments a 700 FICO score can easily be 526.  I understand that many times it seems as if the best solution towards bills that you cannot afford to pay is to act as if they do not exist, but it is these negative habits that we allow to persist that are severely hindering the economic growth of our community.  I challenge you to be responsible to each bill that comes into your home.  We all have had times when we have fell behind or have missed a payment…myself included.  It is how we recover from these moments to diligently create positive habits that will transcend to other areas of our lives.  Responsibility and accountability are principles that we all need to practice in paying bills and to ensure a solid infrastructure of the upcoming economic empowerment movement.

The Debt-to-Credit-Limit Ratio: Your debt-to-credit-limit (D/C) ratio is an important issue as well.  Let’s just say you have a $3,000 balance on a credit card and a total credit limit of $6,000.  Your D/C would be 50% ($3,000/$6,000).  This is an important number that accounts for a high percentage of your FICO score (30%).  Continuing with the above example, if you pay off a $1,000 balance on one of your cards (let’s call it Card A), with a credit limit of $2,500, I would advise you to NOT cancel Card A.  Here is why.  If you cancel Card A, your credit limit will decrease from $6,000 to $3,500 (remember you had a $2,500 limit on the card).  Since you just paid $1,000 of your total balance owed, your new balance owed decreased from $3,000 to $2,000.  Your new D/C ratio would now be 57% ($2,000/$3,500), which increased from 50%. The end result of your presumably responsible behavior of bill payment and debt reduction would be an increase in your debt-to-credit-limit ratio and a decrease in your FICO score.  The best move when paying off the credit card balance would be to simply cut up your card, and leave the credit line open unless there is an annual fee.  There is no sense in wasting $50 to$70 a year on a card you will never use.

The Length of Your Credit History: Your credit history is very important as well.  If you must cancel a card, make sure you cancel the newest ones first.  The Fair Isaac Corporation can use more points of data to determine your FICO score the longer your credit lines have been open.  Protect those cards you have with the longest history.  If you must cancel a card, cancel one card then wait a month.  At the end of the month, wait and see if your score was negatively affected.  If it wasn’t, do the same for each additional card you want to cancel.

New Accounts/ Card-to-Loan Mixture: For 4 and 5, you want to be careful not for apply for too many cards at once.  This sends a red flag to lenders.  Steer clear of too many retail cards as well.  When you are at the sales counter at Sears, it can be very tempting to allow the checkout employee to coerce you into a savings card that will open the door to “extreme savings”.  In the book The Millionaire Next Door, the authors Thomas J. Stanley and William D. Danko mention the most popular credit cards of millionaires.  The top five credit cards of millionaire household members, and the percent of millionaires who own these cards, are:

1. Visa (59%)
2. MasterCard (56%)
3. Sears (43%)
4. J.C. Penny’s (30.4%)
5. American Express Gold (28.6%)

The truly wealthy realize the lack of need for these retail credit card traps.  They use cards responsibly and with caution so as not to accumulate unnecessary, overpriced debt.

Lenders like to see a good mix of installment loans (i.e., monthly car notes, monthly mortgage notes) along with your credit cards.  Installment loans show just how reliable one can be, especially if payments have been made for an extended period of time, as well as in a timely fashion.

So now that you know what goes into a good FICO score it is time to start the road to building up your score. When you buy your new Toyota you want to be sure you have the best rates on your car loan don’t you? Start today!

Ryan Mack, Author of Living in the Village and President of Optimum Capital Management, LLC

Read all of the Your Money In The Black posts here, including:

Seven Tips For Families During The Financial Crisis

“Will the US raise its debt ceiling?”

“Will the tax cuts for the rich be extended?”

“Will the price of gas continue to increase?”

Not to say that these questions aren’t important, but as the unemployment rate holds steady above 9 percent and the real rate of unemployment is over 16 percent people are less concerned about taxes, debt ceilings, and gas prices than they are concerned about keeping their jobs or finding one. So with that in mind, I wanted to dedicate this article to those who are unemployed by giving them some financial tips/strategies to employ in this hard economic market.

Whenever I discuss financial tips/strategies for the unemployed, many in the audience respond with bewildered looks coupled with a “huh?!”  Or I get the classic oversimplified response which states, “FIND A JOB!”  This is great advice, but there are other financial strategies for those who find themselves unwillingly placed into the ranks of the unemployed.

1.      Get rid of foolish pride – Many people feel that their job is an integral part of their identity. They take pride in their career and being laid off or fired can be a huge blow to the ego. I have spoken with many who experience a sense of shame upon finding themselves unemployed.  This shame can lead to medical ailments such as depression or stress. Going into a shell or becoming the life of the party to mask the reality of your situation from your friends are both very normal occurrences.  Picking up the dinner tab with friends, shopping sprees, and trying to put on the facade that things are still normal is a very destructive and expensive habit. Not only are you using money which should be kept in your savings, but you are depriving yourself of a very important resource — your network.

Your network of family, friends and acquaintances who can help you find employment is often more expansive than you realize. Very often your friends and family are more likely to work harder for you to find employment than random strangers who read your resume on websites and with employment agencies.  The more people who know about your situation, the more support you will have from those willing to go the extra mile to provide assistance. Warm referrals, placing resumes directly into the hands of people who can make hiring decisions, and constantly monitoring the employment scene are more likely to occur by people who care about your future. In addition, using social networking sites like Linkedin, Facebook, and Myspace can magnify your outreach to others who can assist you in your search.

2.      File for benefits – There are some who are unemployed who feel so disillusioned and embarrassed by their situation that they are reluctant to file for unemployment benefits. You have been paying for someone else to get these benefits whenever you pay your taxes, so you might as well obtain some assistance for yourself in your time of need.

3.      Join the ranks of the “Under Employed” – Having “a” job is better than having “no” job. The mortgage company or your landlord will not stop collecting rent just because you lost your job. If you find it hard to find a job in your first field of choice, you must begin to look for the next best thing. There are thousands in my hometown of Detroit who are in this very predicament. They were laid off from the automobile industry and have no other training but that which applies to a suffering industry. If you can, find a job that will at least help pay bills so you can remain above water. While you are working as an “under-employed” individual, consider other options that you might pursue while you are working – options that will expand your scope of career choices and therefore make you more marketable. For example, community colleges offer inexpensive classes and training, non-profits offer free and inexpensive certification courses (consult your local politicians office for a list of community resources), and the internet has made the new education and training search much easier. Never look at a temporary job as a negative or a step backwards; think of it as a positive event that buys you the time to look for the job of your first choice while allowing you to pay your bills.

4.      Get CHEAP! – Your pot of funds now has a finite ending and every penny spent gets you one penny closer to that scary ZERO figure! Now is the time to design a budget for your household, tighten your belt, use coupons, buy food in bulk, use only your ATM machine to avoid charges, and eliminate all impulse spending.

Lowering your interest rates can assist in lowering your monthly bills so inquire about lowering your interest rates on your credit cards or your eligibility to refinance your home. Fannie Mae has reported that up to 50 percent of individuals who own a loan from Freddie Mac or Fannie Mae — and who are eligible for a loan refinance — have not taken advantage of the opportunity to get a lower interest rate.

Here are a few other quick tips that will allow you to cut costs:

• Cut all unnecessary luxury spending that create monthly bills such as cell phone bills (use a house phone and carry two quarters), gym memberships (work out at home), garage parking in the city (park on side streets), and magazine subscriptions (read articles on the internet for free at the library).
• Only take on additional debt in the case of an emergency.
• Talk to your accountant about researching all legal tax strategies that you can utilize.
• No more loans or money gifts to family members and/or loved ones.

5.      Make job searching a job – If you are unemployed, your new job is to find a job. Create an organized database listing all places that have received your resumes, the primary contact person and and an expected date to hear from them.  Rank them in your database according to the likelihood of receiving a yes.  Start your search early in the morning and set as many appointments as possible. Schedule meetings and appointments on a daily basis since the more time that you spend away from home —  the more productive you will be — and less time will be spent watching daily talk shows.

6.      Stay healthy – Even with the 65% COBRA subsidy from the government, maintaining health insurance can be costly.  Whether you elect to maintain health insurance or not (I always advise against going without health insurance), make sure you are taking every precaution to remain healthy. Eat healthier.  As we all know, junk food is not only high in calories but it is usually filled with sugar which leads to more costly trips to the dentist. Work out at least three times per week for a minimum of 30 minutes per day, wash your hands regularly, get plenty of sleep, and take up yoga at home. Staying healthy is not only good for the body, but it helps to maintain a positive/confident outlook that will make for a more impressive job interview.

7.      Don’t touch your 401k (if you can help it) – Try your best not to have a knee jerk reaction to raid your 401K or company retirement plan. Keep in mind, just because your statement reads “$50,000” does not mean you have that much to withdraw.  If you consider the federal, state, and perhaps city taxes on the funds that you have invested along with the 10% early withdrawal penalty; and the possibility of deducting any matching funds contributed by your company (if you are not fully vested); that $50,000 could easily turn into $25,000. Raiding the company retirement plan should be the absolute last option.

8.      Investing is Not a Priority – If you have other investments, don’t use this as a time to check your portfolio every minute hoping that the $10 stock turns into the next Google. This is unnecessary stress in your life. If you were putting funds into an account monthly, those funds should now be diverted into your checking or savings account with the most access. Liquidity is your best friend in these times of hardship and stocks are not liquid. Even if you have your funds in a standard, non-qualified brokerage account you may not have to pay a penalty for the sale of a stock, but you have tax liabilities if you have gains. As with the 401K, stop your investing in these funds, but don’t rush to liquidate them at first. However, if you are forced with the choice between paying rent and keeping a position in a stock, and you have exalted ALL other options, feel free to sell the stock.

9.      Decide which bills to pay first – After you have exhausted all options, if you are still unemployed, there may be a time to make hard decisions about which bills take priority.  This should not be determined by which collection agencies are the most annoying or seem to yell the loudest. If you cannot pay your light bill, you may lose your lights. If you cannot pay your phone bill, you may lose your phone. However, if you cannot pay your rent or mortgage, you will lose your home. Losing your phone or lights might be a tremendous loss, but not as big of a loss as having to sleep on the street. I am not suggesting that it is okay to skip any bill payment that you owe as this is irresponsible and negatively impacts your credit; however, when hard times are upon us, we must keep things in proper perspective.

Here are a few things to consider BEFORE you decide to skip a bill payment:

• Have you called the companies before to negotiate a payment plan?
• Have you checked your budget and cut all luxury expenditures to see if you can squeeze out a few extra dollars?
• Do you have any items around the home of value that you would consider selling? Is it time to host that yard sale that you have been considering?

10.  Don’t Get Suckered – When desperation sits in, financial offers that you would not have considered before now begin to look more attractive. The financial predators are constantly swimming in the waters trying to attract those who are worried, anxious, and concerned that using “traditional” strategies of working hard will not be effective.  These are the commercials that only play during the middle of the day or late at night when the typical employed person will never see them. They offer you overnight fame by purchasing the most effective real estate system ever created; or magical options trading software that can never be incorrect. For a small fee, you will be able to purchase your financial freedom — what a deal!  Your money is too valuable to waste on false notions of fast prosperity.

11.  Have Faith! – What other choice do you have? Faith is not waiting on a unicorn to prance into your life or a rainbow to form which signifies the end of your misery. Faith is half believing and half acting on that belief. People behave according to what they believe will happen. So if you believe that things will continue to be bleak, your job search will weaken and this will lessen the chances of finding a job.  However, if you believe that your future will be bright, and you hold onto this positive outlook, you will be more likely to do the work that is necessary to find employment.  I promise this to you, if you hold on to the belief that you will find a job, and aggressively pursue that belief, you will survive these hard times!

Ryan Mack, Author of Living in the Village and President of Optimum Capital Management, LLC

Read all of the Your Money In The Black posts here, including:

Seven Tips For Families During The Financial Crisis

There are two primary components that comprise the essence of faith. The first element is “to believe”. Do you believe that you will be able to meet your goals and achieve wealth in your future?  Can you visualize that new house, new job, or a retirement fund that covers all of your living expenses for the remainder of your days?

The second element is “acting on what you believe”.  This is just as important as the first.  I will outline seven actions that you can begin today that will allow you to demonstrate that your faith for a brighter tomorrow is real.

One: Put together a household budget using a template, Quicken, or even a website such as www.mint.com.

Two: Make sure that you have adequate insurance coverage to manage life’s unexpected risks.  However, do not fall prey to predatory insurance coverage.  Let your needs dictate how much insurance you purchase and not the desire for a commission of an insurance agent.

Three: Plan your estate wisely.  Invest in a will, a living will, health care proxy, and a power of attorney.  We never know what tomorrow holds and our families left behind suffer from lack of preparation.

Four: Increase your FICO score to 750 or higher.  Your credit score is too important to neglect.

Five: Eliminate all of your credit card debt.  With a national average APR of 14.6% this debt is far too expensive for our households to carry.

Six: Maximize your company retirement plan.  In my years of teaching I have NEVER heard someone putting too much money into their 401K, but have heard many complaints about not putting enough.

Seven: Keep at least 9 months of living expenses saved in a high yield savings account for a rainy day.

If you can do just these steps you would be making a good start to a brighter financial future.  Remember, faith is not just a feeling…it is an action.  Take action today to take control of your financial future!

Ryan Mack, Author of Living in the Village and President of Optimum Capital Management, LLC

Read all of the Your Money In The Black posts here, including:

11 Tips For The Unemployed

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RACINE, Wisconsin (AP) — President Barack Obama on Wednesday lashed out at Republicans as out of touch with the daily problems of Americans, hoping to sharpen the contrast with the opposition party as midterm elections loom and economic anxiety still runs high.

Speaking to a town hall in his latest getaway from Washington, Obama reveled in what the Democratic Party sees as two recent political gaffes by Republicans — one House lawmaker’s apology to BP oil and another’s characterization of the nation’s financial collapse as an “ant.”

More broadly, Obama said of Republicans: “Their prescription for every challenge is pretty much the same — and I don’t think I’m exaggerating here: basically cut taxes for the wealthy, cut rules for corporations and cut working folks loose to fend for themselves.”

Yet it is Obama and Democrats, as the party in power, who stand to take the most heat from the public concern about swelling government spending. The president jumped on a chance in the town hall to defend the rescue efforts for the auto companies and the big banks and to embrace the frustration about them.

“How do we get government spending under control?” he asked, giving voice to public complaints. “That’s a legitimate question. And whether you’re a Democrat, an independent or a Republican, all of us should be worried about the fact that we have been running the credit card in the name of future generations. And somebody’s going to have pay that back.”

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Obama said the main culprit was not the costly emergency measures under his watch but a structural habit of the government spending more than it takes in. He said the answer is to reduce spending in a “gradual way” that doesn’t hurt people.

Obama spoke in Racine, south of Milwaukee, where the jobless rate stands at a troubling 14.2 percent, well above the national average.

Visit msnbc.com for breaking news, world news, and news about the economy

The stop in Wisconsin, a state Obama won in 2008, was ostensibly intended to allow the president to hear from residents in a format he favors. But with his economic leadership in deep question and national unemployment persistently near 10 percent, Obama seized a chance to defend his vision with gusto.

With the country fatigued by bailouts and worried about federal debt, Obama tried to remind people that, in his view, it was a hands-off government attitude that helped cause the problems he inherited. He said he did not want big government, but rather a “responsible government” that is on the side of the people.

“We’ve tried the other’s sides theories,” Obama said. “We know what their ideas are. We know where they led us.”

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Ticking off his grievances, Obama called out some Republicans for opposing a pending extension of unemployment benefits; a measure to raise the liability that must be paid by companies that cause environmental disasters; and a massive Wall Street reform bill.

Responding to House Minority Leader John Boehner’s gripe that the financial bill amounts to “killing an ant with a nuclear weapon,” Obama challenged Boehner to explain that to the people of Racine. The president also seized on Republican Rep. Joe Barton’s apology to BP — Barton later apologized for the apology — over the $20 billion victims’ compensation fund Obama pressured BP to establish. The president scoffed at Barton, the top Republican on the energy committee.

“Did you all read about that?” Obama said. “He apologized to BP that we had made them set up this fund — called it a tragedy that we had made them pay for the destruction that they’ve caused. … I mean, the tragedy is what the people of the Gulf are going through right now. That’s the tragedy.”

Once the audience got involved, Obama fielded questions about help for struggling homeowners, support for the military, the costly economic stimulus law and more.

The president seemed to enjoy the moment. And earlier, on his way into town, Obama found a different slice of happiness — at a pastry shop.

He made a surprise detour to O&H Danish Bakery, purveyor of a delicacy called a kringle — a large round flat pastry with a hole in the middle. He ordered one pecan and one cherry. A saleswoman recommended the cheese as well, so he said, “Let’s get a third!”

RELATED: Gov. Deval Patrick: GOP Borders On “Sedition”

WASHINGTON (AP) — If Chuck Lacasse had gotten his pink slip four days earlier, Uncle Sam would have covered most of his family’s health insurance while he looked for a new job.

But Congress allowed emergency health care assistance for unemployed workers to expire May 31, and seems unwilling to renew it despite pleas from President Barack Obama.

On Saturday night, the White House released a letter Obama sent to congressional leaders of both parties asking for nearly $50 billion in emergency aid to state and local governments to fend off “massive layoffs of teachers, police and firefighters” and to prevent a possible double-dip recession.

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“We are at a critical juncture on our nation’s path to economic recovery,” the president warned. “It is essential that we continue to explore additional measures to spur job creation and build momentum toward recovery, even as we establish a path to long-term fiscal discipline. At this critical moment, we cannot afford to slide backwards just as our recovery is taking hold.”

In an interview with the Washington Post, White House Chief of Staff Rahm Emanuel “said the letter is intended to settle the growing debate over the opposing priorities of job creation and deficit reduction and ‘where you put your thumb on the scale’.

Not three months after lawmakers passed his $1 trillion insurance overhaul, Obama is facing a rare defeat on health care at the hands of his own divided Democrats. So-called “moderates” have rebelled against adding billions more to the deficit in a treacherous election year.

“The same Congress that spent all this political capital trying to get people health insurance is going to take a crucial benefit away from unemployed people,” said Andrew Stettner, deputy director of the National Employment Law Project, which advocates for the unemployed.

On June 4, Lacasse lost his job as advertising director for a company that makes nutritional supplements. He’ll soon have to pay the entire $1,500 monthly premium to keep his family covered under his former employer’s health insurance plan.

Until May 31, under Obama’s economic stimulus law, the government provided a 65 percent subsidy. That would have lowered his cost to $525.

“This really isn’t about welfare,” said Lacasse, 40. “It’s about buying people some time. In a position as specialized as mine, it would have been nice to know that I had some time to look for the right job.” He lives near Green Bay, Wis., with his wife and two children.

Democratic Sens. Bob Casey of Pennsylvania and Sherrod Brown of Ohio have introduced a measure that would allow the program to continue helping people who get laid off through Nov. 30. That would cover Lacasse.

The lawmakers, who are seeking a vote this coming week, want to attach their nearly $7 billion provision to must-pass legislation that would extend unemployment benefits and make changes in dozens of federal programs. But a similar proposal was dropped from the House-passed bill, and Senate Democratic leaders also omitted it from their version.

“I’m concerned about it,” said Washington Sen. Patty Murray, a member of the Democratic leadership. “There will be people who fall through the cracks.”

Under a 1980s law known as COBRA, laid-off workers generally can stay on their former employers health plan for up to 18 months, provided they pay the full premium plus a small administrative charge. But with family premiums averaging about $13,500, the cost is prohibitive for most people.

That changed under the 2009 stimulus bill and subsequent expansions, which provided a 65 percent federal subsidy for up to 15 months. Workers laid off through May 31 can qualify for the benefit through their former employer.

“It has been a significant program and it has helped many middle-class families to keep their health insurance at a time when maintaining health insurance was difficult because of the high rate of job loss,” said Alan Krueger, the Treasury Department’s chief economist. Official statistics on how many people were helped have yet to be compiled, but Krueger estimates that as many as one-third of eligible unemployed workers enrolled in subsidized coverage.

Melanie Miller, 34, who suffers from debilitating neurological problems, said the COBRA program allowed her to maintain her independence after losing her ad agency job. “Without the subsidy, I probably would have had to move back and live in my mother’s house in the basement,” said Miller, an artist who lives in Philadelphia.

With the unemployment rate hovering just under 10 percent and with 15 million people looking for work, advocates say it’s premature to withdraw assistance.

“We’re recovering, but we haven’t recovered fully,” said Casey. “Now is not the time to pull up the ladder on people who are hanging on, in some cases to the last rung.”

Some conservative Democrats, however, say they don’t understand why the government should subsidize workers who lose jobs with employer coverage and not others who are equally deserving – for example self-employed people priced out of the private market.

“You’re paying 65 percent of (one) family’s health care costs, but the neighbor next door, there’s no help for,” said Rep. Dennis Cardoza, D-Calif. “So we’re picking and choosing. There’s an inequality there between our constituents.” Not to mention that Congress has treated the program as emergency spending, adding its cost to the deficit.

In Marietta, Ohio, boiler operator Neil Davis is facing the loss of his job as the coal-burning power plant he works at prepares to shut down for good. Davis, 33, has marketable skills but he’s unsure how quickly he’ll be able to find comparable work. His wife is a stay-at-home mom raising two elementary-age children.

“Being able to have coverage at an affordable rate, we wouldn’t be afraid to take the kids to the doctor if they get sick,” said Davis. “The economy might be getting better some place, but I don’t know where at.”

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From HuffingtonPost.com:

This week Congress will consider legislation to reauthorize extended unemployment benefits for the rest of the year. It’s going to be an epic fight: Republicans in the Senate will likely do everything they can to stand in the way of a bill projected to add $123 billion to the deficit, forcing Dem leadership to round up a supermajority for a last-minute Friday vote before Congress adjourns for its Memorial Day recess.

Too bad the jobs crisis, in a big way, has already left this bill in the dust. Hundreds of thousands of people have exhausted their extended unemployment benefits. In some states, laid-off workers can receive checks for 99 weeks — and that’s all they’re going to get. This bill isn’t for the “99ers” and there’s no proposal on deck to give them additional weeks of benefits.

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“What’s frustrating is that our government doesn’t seem to think this is an important issue,” said Christy Blake, a 35-year-old mother of two in Fruitland, Md. “We didn’t put ourselves here. It wasn’t our choice. I have been diligently looking for work.”

Click here to read more.

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WASHINGTON (AP) — The number of people filing new claims for unemployment benefits unexpectedly rose last week by the largest amount in three months. The surge is evidence of how volatile the job market remains, even as the economy grows.

Applications for unemployment benefits rose to 471,000 last week, up by 25,000 from the previous week, the Labor Department said Thursday. It was the first increase in five weeks and the biggest jump since a gain of 40,000 in February

The forecast had been for claims to fall by around 4,000 from the previous week.

“Although no one expects this volatile series to go in one direction every single week, this is clearly a disappointment,” said Jennifer Lee, senior economist at BMO Capital Markets.

RELATED: Obama: “We’re Turning The Corner” On Unemployment

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Stocks slid at the opening bell, shortly after the release of the jobless claims report. The Dow Jones industrial average was down more than 200 points in the first 15 minutes of trading.

The total was the highest since new claims stood at 480,000 on April 10. It also pushed the average for the last four weeks to 453,500.

Employers are hiring again, but not at levels needed to make a dent in the unemployment rate, which increased in April to 9.9 percent. An improving economy has lured those who had given up looking for work back into the labor market. The jump in the unemployment rate came even though payrolls rose last month by 290,000 jobs, the biggest gain in four years.

Analysts could trim their forecasts for job growth in May based on the sudden rise in new claims. The increase occurred in the week that the government conducts its survey for the monthly unemployment report.

The number of people receiving jobless benefits fell by 40,000 to 4.63 million for the week ending May 8.

However, that figure does not include unemployed workers who have exhausted their regular 26 weeks of benefits. An additional 5.3 million workers are receiving extended benefits paid for by the federal government for the week ending May 1.

RELATED: U.S. Adds 290K Jobs, Highest In 4 Years

The extended benefits have added as many as 73 weeks of unemployment on top of the 26 weeks customarily provided by the states. But jobs have been scarce for so long that many of those out of work will soon run out of the extended benefits.

For the week ending May 8, 35 states and territories saw increases in applications for new jobless benefits and 18 saw declines.

The largest increase came in California, up 8,351 because of layoffs in service industries and manufacturing. It was followed by Michigan, up by 3,175 because of layoffs in the auto industry.

The states with the largest declines in jobless application were: New York, down by 3,144, because of fewer layoffs in transportation, services and manufacturing; and Kentucky, with a drop of 2,193.

RELATED: More Jobs May Be Created This Year Than In Entire Bush Presidency

LAWRENCEVILLE, Ga. – About 180 county employees in suburban Atlanta are being asked to return thousands of dollars the county says they were overpaid 16 years ago.

Gwinnett County’s chief financial officer, Aaron Bovos, calls it a project to “clean up receivables and to eliminate outstanding obligations.”

The county is seeking to collect more than $39,000 from employees who received bonuses in their paychecks in 1994. Authorities blamed the overpayments on a payroll anomaly when the county adjusted employees’ payroll cycles.

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Employees can apply the money to vacation leave or make a cash payment.

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From HuffingtonPost.com:

One raw day in early February, Vicki Valentine stood by helplessly as real estate investors snatched her West Baltimore home over what began with an unpaid city water bill of $362.

As snow threatened to fall, she watched a work crew hired by the new owners punch out the lock on her front door. A sheriff’s deputy was on the scene while Valentine and her teenage son piled whatever they could into a borrowed car.

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Running out of time, Valentine scrambled to pack up clothing and mementos. The home had been her family’s for nearly three decades, and her father had paid off the mortgage in 1984. “It’s hard to say goodbye to this house,” she said. “It’s like someone forcing you out of something that belongs to you. I don’t get it.”

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WATCH here:

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Foreclosures Drop 2%, First Annual Drop In 5 Years

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From NationalJournal.com:

If the economy produces jobs over the next eight months at the same pace as it did over the past four months, the nation will have created more jobs in 2010 alone than it did over the entire eight years of George W. Bush’s presidency.

That comparison comes with many footnotes and asterisks. But it shows how the economic debate between the parties could look very different over time — perhaps by November, more likely by 2012. More important, the comparison underscores the urgency of repairing an American job-creation machine that was sputtering long before the 2008 financial meltdown.

First, the numbers: From February 2001, Bush’s first full month in office, through January 2009, his last, total U.S. nonfarm employment grew from 132.5 million to 133.5 million, according to the Bureau of Labor Statistics. That’s an increase, obviously, of just 1 million. From January through April of this year, the economy created 573,000 jobs. Over a full year, that projects to 1.72 million jobs. Job-creation numbers are notoriously volatile, so the actual result could run above or below that estimate. But Obama administration economists are increasingly optimistic that job growth this year will exceed expectations. Few of them will be surprised if more jobs are created in 2010 than over Bush’s two terms.

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Now the principal footnote: To compare job growth in 2010 with Bush’s record ignores the nearly 4 million jobs lost in Obama’s first year, during the freefall that began in Bush’s final months. That’s like ignoring a meteor strike. Over time, voters are likely to judge Obama by his degree of success in eliminating that deficit and reducing unemployment. Still, if the economy this year produces more than 1 million jobs — or, conceivably, more than 2 million — that will give Democrats more ammunition to argue that their agenda has started to turn the tide.

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WASHINGTON (AP) — Millions of Americans are still likely to lose their homes in the coming years, but the foreclosure crisis is finally showing signs of subsiding.

The number of households facing foreclosure in April fell 2 percent from a year ago, the first annual decline in five years, RealtyTrac Inc. said Thursday.

But the data aren’t all sunny. While the number of new delinquencies is dropping, the number of borrowers losing their homes is still rising. Banks seized a record 92,000 homes last month.

And there are millions more potential foreclosures ahead. Nearly 7.4 million borrowers, or 12 percent of all households with a mortgage, had missed at least one month of payments or were in foreclosure as of March, according to Lender Processing Services Inc., a mortgage data research firm.

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RELATED: Fannie Mae & Freddie Mac Suspend Foreclosures For Holidays

RealtyTrac, a foreclosure listing firm in Irvine, Calif., reported that nearly 334,000 households, or one in every 387 homes, received a foreclosure-related notice in April. That was down more than 9 percent from March.

Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.

As the economy turns around, “you will see an improvement in housing markets and in foreclosure activity,” said Rick Sharga, a RealtyTrac senior vice president. “The problem is that there’s such a backlog right now.”

Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can’t qualify or fall back into default.

The Obama administration is managing a $75 billion program that so far has helped about 231,000 homeowners with permanent reductions to their monthly mortgage bills. That’s about 20 percent of the 1.2 million borrowers who started the program over the past year.

Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. Cities lose property tax dollars from homes that sit empty and lower property values.

RELATED: Black & Latinos Hit Hardest By Foreclosure Crisis

Among states, Nevada posted the highest foreclosure rate in April, with one in every 69 households receiving a foreclosure notice. Foreclosures there were up 10 percent from March, but unchanged from a year earlier. Next on the list were Arizona, Florida, California and Michigan.

Las Vegas continued to be the city with the nation’s highest foreclosure rate, but activity there was down 3 percent from a year earlier. And in another sign the problem is receding, nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was Reno, Nev., where foreclosures were up 16 percent from a year ago.

WASHINGTON (AP) — Taking aim at deceptive lending, the U.S. Senate on Wednesday voted to ban mortgage brokers and loan officers from getting greater pay for offering higher interest rates on loans, and to require that borrowers prove they can repay their loans.

The Senate, however, rejected a measure that would have required homebuyers to make a minimum downpayment of 5 percent on their loans. The votes were part of the Senate’s deliberations on a broad overhaul of financial regulations designed to avoid a repeat of the crisis that struck Wall Street in 2008.

President Barack Obama weighed in on the Senate debate Wednesday, criticizing a proposed amendment that would exclude auto dealerships that offer car loans from oversight from a consumer financial protection bureau that the broader legislation would create. Auto dealers — influential figures in their communities — have been aggressively lobbying for an exemption from the law, and the amendment, offered by Sen. Sam Brownback R-Kan., could win bipartisan backing.

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“This amendment would carve out a special exemption for these lenders that would allow them to inflate rates, insert hidden fees into the fine print of paperwork, and include expensive add-ons that catch purchasers by surprise,” Obama said in a statement. “This amendment guts provisions that empower consumers with clear information that allows them to make the financial decisions that work best for them and simply encourages misleading sales tactics that hurt American consumers.”

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The administration has fiercely tried to protect the consumer provisions of the bill. It has answered the political power of the auto dealers with an appeal on behalf of the military, arguing that soldiers and their families have been particularly targeted by deceptive dealers.

The Senate unanimously approved an amendment Wednesday that clarified any regulations or enforcement actions by the proposed consumer protection bureau would not affect merchants and retailers that do not engage in a financial services. Critics, including the U.S. Chamber of Commerce, had argued that the bill could affect small business owners such as orthodontists, who allow patients to pay over time.

Separately, the Senate overwhelmingly voted to let the Federal Reserve retain its supervision of smaller banks. The underlying regulation bill would have given the central bank oversight only over the largest financial institutions.

Regional Fed presidents have lobbied senators to allow them to continue watching over smaller bank holding companies and state-chartered community banks. Limiting the Fed’s supervision only to bank holding companies with assets of more than $50 billion — as proposed by Senate Banking Chairman Christopher Dodd, a Democrat, — would have left most of the Fed’s 12 regional banks without any institutions under their oversight.

The lending-related measures attempted to respond to one of the issues at the heart of the financial crisis — the abundance of bad mortgage-backed securities that nearly toppled Wall Street and knocked some of the nation’s largest financial institutions to their knees.

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“Credit was extended to people who couldn’t pay their mortgages back, and those were passed throughout the world,” said Sen. Bob Corker, a Republican. “So we had a systemic crisis, not only in this country, but around the world.”

Senators voted 63-36 to amend an underlying financial regulation bill to place restrictions on how mortgage brokers and bank loan officers get compensated. Supporters argued that consumers were steered into higher rate mortgages that they were unable to pay, resulting in foreclosures and toxic mortgage-backed securities that poisoned the markets.

Borrowers would have to provide evidence of their income, either though tax returns, payroll receipts or bank documents. That provision seeks to eliminate so-called stated-income loans where borrowers offered no proof of their ability to pay.

RELATED: High-Income Black & Latino Borrowers Face High Interest Rates

ALBANY, N.Y. — New York’s Legislature has approved unprecedented furloughs for state workers to contend with the state’s fiscal crisis.

Democratic Gov. David Paterson forced the vote on an emergency spending bill that includes the one-day-a-week furloughs for about 100,000 state workers, meant to save $30 million a week.

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The Senate and Assembly majorities oppose furloughs and called the action illegal, but they had to vote for them because the furloughs couldn’t be separated from the spending bill. Rejecting the measure would have shut down state government.

The workers’ unions have refused requests by the Paterson administration for lag pay and for suspending their raises for a year to – as Paterson puts it – share in the sacrifice of all New Yorkers in the recession. Two unions say they’re seeking restraining orders.

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The precipitating event of the financial crisis was the financial collapse or near collapse of several large financial institutions including Bear Stearns, Lehman Brothers, AIG, Citibank and Bank of America. The unsophisticated view blames this collapse on exotic financial instruments like credit default swap (CDS), CMO’s and other derivatives. In my view, these institutions did not properly analyze the risks in their portfolios; or they understood the risks but decided to take the risks anyway because of the profit potential. Since these institutions were sophisticated investors with some of the best investment analysts on Wall Street working for them, I must assume that they were not stupid. If they were not stupid, then they decided to undertake the high risks in their portfolio to make more money. The nature of risk is that sometimes, even with the best of information and analysis, you lose.

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A risk-free banking system is neither possible nor desirable. A capitalist economy needs banks to make commercially viable loans to businesses that are inherently subject to risks. If congress wants to minimize financial stress in the future, it should begin by seeing what worked in the past. I believe that Congress should consider several reforms.

First, Congress should consider re instituting a modern globalize version of Glass-Steagall and separate commercial banks from investment banks. The FDIC can guarantee the deposits of the commercial banks and the Fed can impose strict regulation on portfolio risks of loans and securities. This will protect the major commercial banks, retail depositors, and the basic (M-1) money supply. The commercial banks will be protected and would not fail. On the other hand, investment banks would be able to take whatever risks they want. If their portfolio is very risky and things work out, they can make a lot of money. If they misjudge the risks and things don’t work out, they would be allowed to fail. In order for this system to work properly, Congress needs to update Glass-Steagall for the realities of the globalization of finance.

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Second, Congress should consider applying the medical profession’s first principal “Do No Harm” to the financial system. Regulation always has unintended consequences. Notwithstanding the SEC’s inability to detect fraud in several high profile cases like Madoff and Stanford, it has done a good job imposing full disclosure on Wall Street. Congress should not saddle it with impossible regulatory responsibility to determine capital requirements, credit standards or approving securities.

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Third, we the people must start targeting our money. We keep depositing our monies into banks that continue to act in an irresponsible way. When you look at the last banking meltdown in this country very few community banks or credit unions where involved in the mortgage crisis meltdown. These banks and finical institutes acted responsible and not greedy as most of the major banks did. These community banks or credit unions are where Americans should bank this would force big banks to change their greedy ways.

Finally, Congress should not create a bank tax to fund future financial bailouts. This fund would create a huge moral hazard by shifting responsibility of solvency of financial institutions from their board of directors to the government. Banks that are too large to fail would have an implicit federal guarantee of their obligations and as a result a competitive advantage in raising funds.

Given Congress’ need to find a scapegoat for the financial meltdown of the Great Recession other than itself, it will no doubt make a least a cosmetic effort at financial reform to show American voters that it has heard their cry to immediately overhaul these financial institutions.

Ballentine is a nationally syndicated radio talk show host and writes a weekly column for Jet Magazine.

From CBSNews.com:

WASHINGTON – The reemergence of a Securities and Exchange Commission porn scandal may be political payback for the agency’s fraud suit against Goldman Sachs, some officials suspect.

News of salacious Internet sex surfing by dozens of SEC supervisors actually broke months ago, but it got new life after the commission’s April 16 vote to act against the financial powerhouse.

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GOP lawmakers have loudly slammed the decision, government sources noted.

Asked whether there was any connection between the lawsuit and the recently leaked inspector general’s report on downloading porn, SEC spokesman John Nester declined to comment.

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WASHINGTON – Treasury Secretary Timothy Geithner (GYT’-nur) says the economy is growing faster than the Obama administration expected.

He tells NBC’s “Meet the Press” that the country is on the way to sustained job creation. But he acknowledges that unemployment may remain high, close to 10 percent.

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Geithner says there’s more confidence in the business world, and he says the private sector is growing. He also says people are spending more.

He said he sees encouraging signs that should make Americans confident the country will emerge stronger.

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From LATimes.com:

President Obama signed an extension of jobless benefits for the long-term unemployed Thursday night that will allow those whose aid expired to apply retroactively.
When Congress passed the measure earlier in the day, it ended, at least for now, a partisan stalemate that highlighted election-year differences over federal spending.

The Senate passed the $18-billion measure, 59 to 38, with the support of 54 Democrats, three Republicans and two independents. Every other Republican opposed it; the other three Democrats were absent.

Hours later, the House passed the bill, 289 to 112.

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The measure extends jobless aid through June 2. Democrats, anxious about high unemployment in an election year, are working on separate legislation to extend benefits through the end of the year.

Obama urged them to do so and said, in a statement: “In these tough economic times, it is more critical than ever to bring relief to Americans who are working every day to find a job, and families that are struggling to make ends meet.”

He called job creation his top priority and pledged to “fight day and night until every American who wants a good job has one.”

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Senate To Argue Over Extension Of Jobless Benefits

Senate To Pass Unemployment Aid

BOSTON – The tea party movement is returning to the city from which its revolutionary spirit was born, with Sarah Palin headlining a final rally before the activists’ cross-country tour culminates in Washington on Tax Day.

A crowd of up to 10,000 was forecast Wednesday for Boston Common, just across town from Boston Harbor, where the original Tea Party occurred in 1773 among colonists upset about British taxation without government representation.

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RELATED: FOX Admits Tea Party Filled With Conservative Kooks

Some 237 years later, the speaking roster included several conservative radio hosts, as well as Victoria Jackson of NBC-TV’s “Saturday Night Live” and Jim Labriola of ABC-TV’s “Home Improvement.”

Yet the event was equally noteworthy for its absences, including that of Sen. Scott Brown. The fiscally conservative, small government, anti-Obama movement has claimed the Republican as its proudest accomplishment after he upset Democrats in this historically blue state and claimed the U.S. Senate seat held for nearly a half-century by liberal iconEdward M. Kennedy.

Officially, Brown’s staff says he’s too busy with his congressional duties — but he also kept the movement at a respectful distance during his campaign last winter.

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If he gets too close, the freshman senator, who’s still getting used to his national profile, risks being aligned with the tea party’s more radical elements, which have questioned the legitimacy of everything from President Barack Obama’s U.S. birthplace to his college degree.

“His ‘business in Congress’ is getting re-elected in 2012, and to do that, he needs to present a moderate image. Going to a tea party rally is about the last thing he needs,” said Jeffrey Berry, a political science professor at Brown’s alma mater, Tufts University.

“Brown doesn’t want to turn his back on his potential supporters, but he doesn’t want any photographs in the midst of an overly enthusiastic or bombastic event,” the professor added.

The rally, being held across the street from the Massachusetts Statehouse, will be the next-to-last event in the 20-day, 47-city Tea Party Express tour concluding Thursday in Washington.

Palin also spoke on the first day in Searchlight, Nev., hometown of Senate Majority Leader Harry Reid, a Democratic target of the movement.

RELATED: OPINION: The Tea Party Is Channeling The Confederacy

Millions of Americans have lost jobs and businesses during the worst recession in recent history. This crisis has affected Black Americans disproportionately as many of them live in cities directly hit by crises such as the auto industry bust and discriminatory lending. Have you been affected by the recession? Tell us your story. -NewsOne Staff

WASHINGTON – Legislation blending help for the jobless with popular tax breaks for businesses and individuals is slated to pass the Senate Wednesday over protests from conservatives who say it adds too much to the $12.5 trillion national debt.

But compassion for the jobless and the political power of an annual package of tax breaks is likely to produce a bipartisan vote to pass the measure, even though it would add more than $130 billion to thebudget deficit over the next year and a half.

RELATED: Senate To Argue Over Unemployment Insurance Extension

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The bill would provide unemployment benefits of up to 99 weeks in many states for people mired in joblessness as the economy slowly recovers from the worst recession in decades. The measure easily cleared a procedural hurdle Tuesday by a 66-34 vote, with eight Republicans voting with Democrats to break a GOP filibuster.

The measure illustrates the great extent to which direct help for the jobless and the poor makes up a large portion of Democrats’ election-year agenda on jobs — and threatens to squeeze out other items amid concerns about a budget deficit projected at a record $1.6 trillion this year.

The sweeping bill cleans up a host of unfinished congressional business from last year that languished as the Senate focused on health care. It would also prevent doctors from absorbing a 21 percent cut in Medicare payments and extends through December a generous 65 percent subsidy of health insurance premiums for the unemployed under the COBRA program, at a cost of $10 billion.

Democrats also hope to finish work this week on a far smaller job-creation measure blending additional highway spending with new tax breaks for companies that hire the unemployed. The Senate could clear the measure for President Barack Obama‘s signature by Friday.

RELATED: Census Reveals How Recession Has Affected American Lives

Wednesday’s larger bill also provides the annual extension of $26 billion worth of tax breaks for businesses and individuals that are popular with senators in both parties.

The $66 billion cost of providing additional months of unemployment checks — the core benefit is 26 weeks — is added directly to a budget deficit expected to hit $1.6 trillion this year. Federal cash to help states with Medicaid adds about $25 billion more.

“Even though these programs may be good for your state, a senator has an obligation to stand up and say ‘no more,’” said freshman GOP Sen. George Lemieux of Florida. “No more spending our kids’ future. No more bankrupting the promise of this country.”

But Democrats said it would be heartless to cut off unemployment benefits to the long-term jobless and contended that the benefits inject demand into the economy, helping to lift it.

“This is not just some technical bill,” said Sen. Max Baucus, D-Mont. “This bill helps real people. Failure to enact this bill would cause real hardship. Failure to enact this bill would cost jobs.”

The tax breaks include a property tax deduction for people who don’t itemize, lucrative credits that help businesses finance research and development and a sales tax deduction that mainly helps people in the nine states without income taxes.

WASHINGTON – Legislation extending unemployment insurance for the long-term jobless faces a key test vote in the Senate, its momentum helped by about 60 popular tax breaks for individuals and businesses that expired at the end of last year.

The measure also prevents doctors from absorbing a crippling cut in Medicare payments, extends health insurance subsidies for the unemployed and gives cash-starved states help with Medicaid, the federal-state program providing health care to the poor and disabled.

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The unemployment insurance alone — to provide weekly unemployment checks averaging above $300 to people whose core 26-week benefit package has run out — will cost $66 billion through December. In some states people are eligible to receive benefits for up to 99 weeks.

The bill, and the test vote Tuesday, demonstrate the difficulty Democrats face as they focus on jobs. It doesn’t include new ideas for boosting jobs, but instead reprises elements of last year’s $862 billioneconomic stimulus bill, which is earning mixed reviews from voters. Simply extending those provisions has produced a far more expensive measure than a separate so-called jobs bill that Democrats hope to soon send to President Barack Obama. That measure would boost highway spending and give tax breaks to companies that hire the unemployed and could clear the Senate for Obama’s desk this week.

RELATED: Unemployment Dropped To 9.7% In January

At a gross cost of about $148 billion, Tuesday’s measure illustrates the extraordinary cost of the unemployment safety net as the economy inches out of the recession. Democrats say the unemployment benefits inject demand into the economy and say renewing the tax cuts helps preserve existing jobs.

The measure closes $29 billion of tax loopholes to help defray its cost, including one enjoyed by paper companies that get a credit from burning “black liquor,” a pulp-making byproduct, as if it were an alternative fuel.

All told, the measure would add $107 billion to the deficit over the coming decade. Democrats have labeled most of the bill an emergency measure, exempting it from stricter budget rules enacted just last month.

Democrats need to muster at least one Republican vote Tuesday to reach the 60-vote threshold needed to limit debate and guarantee an up-or-down vote. But Sen. Susan Collins, R-Maine, provided crucial help last week to keep the measure out of another procedural tangle, and Democrats sound confident they will prevail.

The bill includes about 60 popular tax breaks for individuals and businesses that expired at the end of 2009. The bill would extend the tax breaks through 2010, at a cost of about $26 billion.

Congress routinely extends the tax breaks each year with large bipartisan majorities. Businesses and tax planners would prefer a more permanent solution, but lawmakers can’t agree on how to pay for a longer extension.

The tax breaks include a property tax deduction for people who don’t itemize, lucrative credits that help businesses finance research and development and a sales tax deduction that mainly helps people in the nine states without income taxes: Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington and Wyoming.

RELATED: Census Survey Reveals How Recession Has Affected Lives

There is a deduction for college tuition for couples making less than $160,000 a year, and one for teachers who use their own money to buy school supplies. There is a tax credit for community development agencies that invest in low-income neighborhoods, as well as a tax break for restaurant owners and retailers who remodel their stores.

The expiration of one tax break, a $1 per gallon credit for the production of biodiesel, has already caused “a pretty substantial blow to the industry,” said Michael Frohlich, a spokesman for the National Biodiesel Board. The credit would cost $1 billion to extend for the rest of the year.

WASHINGTON – President Barack Obama on Saturday pitched his proposed tax on banks to recover the cost of bailing them out during the financial crisis, saying if they can afford billions more in bonuses, they can pay back the taxpayers, too.

The banks and Republican lawmakers oppose the tax, which Obama announced this week.

“We’re going to pass this fee into law,” the president said in his weekly radio and Internet address.

Congress must approve the tax and that was not assured, given the immediate opposition from Republicans. Democrats also appeared in jeopardy of losing their 60-vote majority in the Senate, with Democrat Martha Coakley in an unexpectedly close race against Republican Scott Brown in Massachusetts to fill the seat held for decades by the late Democrat Edward M. Kennedy.

RELATED: HUMOR: Should The Government Bail Out Hip-Hop?

Brown opposes Obama’s bank tax. Obama was heading to Massachusetts on Sunday to campaign for Coakley.

The White House’s decision to use the weekly address to speak about the proposed tax instead of the U.S. response to the suffering and devastation caused by the earthquake in Haiti suggested one line of attack Obama would use against Brown on Sunday.

Obama spoke publicly about Haiti on Wednesday, Thursday and Friday; he was to do so again on Saturday.

The proposed 0.15 percent tax would last at least 10 years and generate about $90 billion over the decade, according to administration estimates. It would apply to about 50 of the nation’s biggest banks, those with more than $50 billion in assets, and include many institutions that accepted no money from the $700 financial industry bailout.

Obama said that although the banks were facing a “crisis of their own creation,” the “distasteful but necessary” taxpayer-funded bailout prevented an “even greater calamity for the country.”

RELATED: Administration To Slash Bailout Cost Estimate

Most of the banks have returned the money they borrowed, and Obama said that was “good news.”

“But as far as I’m concerned, it’s not good enough,” he said. “We want the taxpayers’ money back, and we’re going to collect every dime.”

Six of the biggest U.S. banks are on track to pay $150 billion in total executive compensation for 2009, slightly less than the record $164 billion in 2007 before the financial crisis struck, according to the New York state comptroller’s office.

Obama challenged those who say banks can’t afford the tax without passing the costs on to shareholders and customers.

RELATED: Senate Passes Bailout Bill, House Must Pass Next

“That’s hard to believe when there are reports that Wall Street is going to hand out more money in bonuses and compensation just this year than the cost of this fee over the next 10 years,” he said. “If the big financial firms can afford massive bonuses, they can afford to pay back the American people.”

From HuffingtonPost.com:

Last week, over a pre-Christmas dinner, the two of us, along with political strategist Alexis McGill, filmmaker/author Eugene Jarecki, and Nick Penniman of the HuffPost Investigative Fund, began talking about the huge, growing chasm between the fortunes of Wall Street banks and Main Street banks, and started discussing what concrete steps individuals could take to help create a better financial system. Before long, the conversation turned practical, and with some help from friends in the world of bank analysis, a video and website were produced devoted to a simple idea: Move Your Money.

The big banks on Wall Street, propped up by taxpayer money and government guarantees, have had a record year, making record profits while returning to the highly leveraged activities that brought our economy to the brink of disaster. In a slap in the face to taxpayers, they have also cut back on the money they are lending, even though the need to get credit flowing again was one of the main points used in selling the public the bank bailout. But since April, the Big Four banks — JP Morgan/Chase, Citibank, Bank of America, and Wells Fargo — all of which took billions in taxpayer money, have cut lending to businesses by $100 billion.

Meanwhile, America’s Main Street community banks — the vast majority of which avoided the banquet of greed and corruption that created the toxic economic swamp we are still fighting to get ourselves out of — are struggling. Many of them have closed down (or been taken over by the FDIC) over the last 12 months. The government policy of protecting the Too Big and Politically Connected to Fail is badly hurting the small banks, which are having a much harder time competing in the financial marketplace. As a result, a system which was already dangerously concentrated at the top has only become more so.

We talked about the outrage of big, bailed-out banks turning around and spending millions of dollars on lobbying to gut or kill financial reform — including “too big to fail” legislation and regulation of the derivatives that played such a huge part in the meltdown. And as we contrasted that with the efforts of local banks to show that you can both be profitable and have a positive impact on the community, an idea took hold: why don’t we take our money out of these big banks and put them into community banks? And what, we asked ourselves, would happen if lots of people around America decided to do the same thing? Our money has been used to make the system worse — what if we used it to make the system better?

Everyone around the table quickly got excited (granted we are an excitable group), and began tossing out suggestions for how to get this idea circulating.

Eugene, the filmmaker among us, remarked that the contrast between the big banks and the community banks we were talking about was very much like the story in the classic Frank Capra film It’s a Wonderful Life, where community banker George Bailey helps the people of Bedford Falls escape the grip of the rapacious and predatory banker Mr. Potter.

It was a lightbulb moment. And, unlike the vast majority of dinner conversations, the excitement over this idea didn’t end with dessert.

Click here to read more.

RELATED:

Census Survey Reveals How Recession Has Affected Lives

Recession Worsens Already Poor Prospects For Black Workers

In a move that’s sure to delight debit cardholders nationwide, the Federal Reserve today imposed a new rule prohibiting banks from automatically enrolling customers in “overdraft protection” plans, CNN Money reports. These shady programs — which banks have claimed are meant to help customers — allow debit cardholders to spend money they don’t have, then slap them with fees up to $39 each for every transaction that occurs with a negative account balance. Since banks don’t notify customers immediately when their accounts are overdrawn and decline further transactions, people blithely continue using the cards; stories have abounded of people who were hit with $600 and more in overdraft fees before they realized what was going on.

Currently, more than 75% of banks automatically sign customers up for overdraft programs, according to a study by the Federal Deposit Insurance Corp. [SOURCE: CNN Money]

Until now, bank customers were enrolled in overdraft protection programs without their knowledge and with no way to opt out. Thanks to the Federal Reserve’s new rule, banks will be required to inform customers about the plans and allow them to opt in based on their own discretion. This rule will take effect July 1, 2010.

So when your bank offers you overdraft protection next year, be aware that you have the option to decline this “service” and save yourself a few hundred dollars and a lot of aggravation.

Cheers to the Fed for making a change that will have an immediately tangible, positive effect on American citizens’ wallets.

Read more details about the new rules on overdraft protection plans at CNNMoney.com.

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From NYPost.com:

Wesley Snipes can’t seem to get anything right when it comes to his personal finances.

The notorious star of the hit “Blade” trilogy found a new kind of fame last year when he was sentenced to three years in jail for trying to fraudulently obtain $11.4 million of tax refunds between 1999 and 2001. He was also nabbed for willfully failing to file tax returns.

And now a court case in Britain has revealed that Snipes may have lost millions of dollars during that same period in an alleged Ponzi scheme.

Lincoln Fraser and Jared Brook, the two former bosses of a now-defunct British investment firm Imperial Consolidated, went on trial in London at the end of last month accused of defrauding as many as 3,000 victims out of nearly $400 million.

The pair denies running a Ponzi scheme, maintaining that the firm was a legitimate investment operation that merely fell foul of the market.

To read more, click here.

The number of newly laid-off workers filing first-time claims for jobless benefits rose last week, the government said, though the increase was mostly due to seasonal distortions.

The number of people remaining on the jobless benefit rolls, meanwhile, fell to 6.2 million from 6.25 million, the lowest level since mid-April.

The Labor Department said new claims for unemployment aid increased by 25,000 to a seasonally adjusted 584,000. That’s above analysts’ estimates of 570,000.

A department analyst said the increase comes after claims were artificially depressed earlier this month by the timing of temporary auto factory shutdowns, which happened earlier this year than in most years. Still, this week’s total is below the 617,000 initial claims reported in late June before the seasonal distortions began. It reflects a trend that economists say indicates a slowing pace of layoffs.

The four-week average of claims, which smooths out fluctuations, fell to 559,000, its lowest level since late January.

But jobs remain scarce and the unemployment rate, which hit 9.5 percent for June, is expected to surpass 10 percent by year’s end.

And weekly claims remain far above the 300,000 to 350,000 that analysts say is consistent with a healthy economy. New claims last fell below 300,000 in early 2007. The lowest level this year was 488,000 for the week ended Jan. 3.

The seasonal distortions are due to the fact that the auto companies shut their plants earlier than usual this year. Car makers normally close their factories in early July and temporarily lay off thousands of workers as they retool plants to build new car models.

Those shutdowns happened in May and June this year as General Motors Corp. and Chrysler LLC closed plants after filing for bankruptcy protection. That shift in timing caused new claims to fall sharply in the first two weeks of July. Claims are now rebounding from that artificial decline.

The recession, which started in December 2007 and is the longest since World War II, has eliminated a net total of 6.5 million jobs. The unemployment rate is expected to rise to 9.7 percent when the July figure is reported next week.

More job cuts were announced this week. Verizon Communications Inc. said Monday that it would cut more than 8,000 employee and contractor jobs before the end of the year.

Among the states, California had the biggest increase in claims, with 4,290, which it attributed to increased layoffs in the construction and trade industries. Michigan, Florida, Connecticut and Indiana had the next-largest increases. State data lags behind initial claims data by one week.

New York had the largest drop in claims, with 22,052, which it said was due to fewer layoffs in the service and transportation industries. Wisconsin, Missouri, Pennsylvania and Ohio had the next largest declines.

From Time.com:

The $787 billion stimulus plan is turning out to be far less stimulating than its architects expected.

Back in early January, when Barack Obama was still President-elect, two of his chief economic advisers — leading proponents of a stimulus bill — predicted that the passage of a large economic-aid package would boost the economy and keep the unemployment rate below 8%. It hasn’t quite worked out that way…

Click here for the full story.

The government says the number of newly laid-off workers filing initial claims for jobless benefits fell sharply last week, largely due to changes in the timing of auto industry layoffs.

The Labor Department says the number of first-time jobless claimsplummeted by 52,000 to a seasonally adjusted 565,000, the lowest level since early January. That’s significantly below analysts’ expectations of 605,000.

But a department analyst says the drop is mostly due to technical factors. Auto layoffs that normally take place in early July, as factories are retooled to build the next year’s models, happened in the spring asGeneral Motors Corp. and Chrysler LLC implemented sweeping restructuring plans.

Continuing jobless claims, meanwhile, jumped to 6.88 million, a new record high.

From NYTimes.com:

The Pontiac Assembly Center in Pontiac, Mich., is a massive, low-slung structure of concrete and corrugated green steel that squats conspicuously among the many strip malls that line one of the city’s main thoroughfares, South Opdyke Road. Locals refer to the three-million-square-foot factory, which makes Chevrolet Silverado and GMC Sierra pickup trucks, as Plant 6, because when it opened in 1972, it was the sixth General Motors manufacturing facility in this city, 25 miles north of downtown Detroit. At the time, General Motors was the world’s largest automaker. It dominated the American market, manufacturing half of the vehicles sold in the U.S. As recently as 2003, Plant 6 was running three consecutive eight-hour shifts, employing 3,000 people and making 1,300 trucks a day.

Today, Pontiac Assembly is the city’s last working auto-assembly plant, and like many of America’s car factories, it is operating at a greatly diminished capacity.

Click here for more.

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Class Warfare, American-Style

From HuffingtonPost.com:

As California lawmakers tackle their state’s $24 billion deficit, one little-known proposal on the table is a $20 million cut to the state crime lab.

That may not sound like much alongside the hundreds of millions in proposed slashes to the state’s education, prison and health care systems. But it’s half the lab’s budget and would likely halt or delay the testing of rape kits, DNA and other crucial crime scene evidence in many counties, law enforcement officials warn.

The $20 million cut was approved by the state’s budget committee last week and now goes to the entire legislature for approval. If it is passed, the lab would have to charge law enforcement agencies for tests it has always provided for free, even though many of those agencies are facing budget cuts of their own. Last year, the state lab tested evidence in about 50,000 cases, including more than 1,400 containing DNA.

Advocates for crime victims are urging lawmakers to reject the proposal, because they worry that delays in testing evidence will allow rapists, murderers and other violent criminals to remain on the streets.

Click here for more.

Is President Obama becoming the Drake of U.S. politics – flooding the excessively eager media with his image? Bill Maher seems to think so. Maher wrote in a June 17 editorial in the LA Times:

“President Obama should just join the cast of ‘I’m a Celebrity, Get Me Out of Here!’ It’s not that far fetched; he’s been on everything else. I’m still a fan, but there’s a fine line between being transparent and being overexposed. Every time you turn on the TV, there’s Obama. He’s getting a puppy! He’s eating a cheeseburger with Joe Biden! He’s taking the wife to Broadway and Paris — this is the best season of “The Bachelor” yet! [...] Remember during the campaign when John McCain attacked Obama for acting like a celebrity and we all laughed at the grumpy old shellshocked fool? Well, it turns out he was right.”

Do Maher and McCain have a point? Let’s take a look at his week in review. In the past seven days, Mr. President…

… proposed an overhaul of the U.S. financial system.

… wrote a super sweet (and super public) reflection on fatherhood.

… made the case for universal health care.

… swatted a fly.

… got into trouble with PETA for his cruelty to the aforementioned fly.

… extended some benefits for federal employees’ same-sex partners.

… got hated on by the ghost of presidencies past, and by plain old racists.

Well, he’s definitely been busy. What do you think?  Does he need to get back into the Oval Office and get to work, or is there no such thing as too much Obama?

The total number of people on the unemployment insurance rolls dropped for the first time since early January, the government said Thursday, while new claims for benefits rose slightly.

The Labor Department said the total unemployment insurance rolls fell by 148,000 to 6.69 million in the week ending June 6, the largest drop in more than seven years. The decline is a sign that layoffs are easing.

The drop also breaks a string of 21 straight increases in continuing claims, the last 19 of which were records. A dip in continuing claims several weeks ago was later revised higher.

The department also said initial claims rose 3,000 to a seasonally adjusted 608,000 last week, above analysts’ expectations. The four-week average, which smooths fluctuations, fell by 7,000 to 615,750. Continuing claims data lags initial claims by one week.

The drop in continuing claims could signal a slowing in the rise of theunemployment rate, which reached a 25-year high of 9.4 percent in May. Many economists forecast the rate could reach 10 percent by the end of the year.

Still, millions of Americans are receiving unemployment compensationunder an emergency federal program authorized by Congress last summer and extended by the Obama administration’s stimulus package.

About 2.36 million people received benefits under that program in the week ending May 30, an increase of more than 102,000 from the previous week. That’s in addition to the 6.7 million people receiving benefits under the 26-week program typically provided by states.

Economists also are closely watching the level of first-time claims for signs the economy will recover by mid-summer, as many analysts predict.

“If the labor market is indeed stabilizing, we should see a marked decline in new unemployment filings in the weeks ahead,” economists at Wrightson ICAP wrote in a note to clients this week.

The four-week average of claims has dropped by about 40,000 from nearly 659,000 in early April, its peak for the current recession.

But many economists want to see it fall further. Bruce Kasman, chief economist at JPMorgan Chase & Co., said Tuesday that a drop in the four-week average to 580,000 by next month would be sufficient to declare the recession over.

Kasman is chairman of the American Bankers Association’s economic advisory committee, a group of economists for large banks that this week predicted the economy will recover in the third quarter. The Federal Reserve also expects the economy to begin growing again this year.

First-time jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy’s health. Initial claims stood at 390,000 a year ago.

Consumers and businesses have cut back on spending in response to the bursting of the housing bubble and the financial crisis, sending the economy into the longest recession since World War II. Companies have cut a net total of 6 million jobs since the downturn began in December 2007, in an effort to reduce costs.

Still, job cuts are slowing. The Labor Department said employers eliminated 345,000 positions in May, about half the monthly average of jobs lost in the first quarter.

More job cuts have been announced in the past week. MySpace, the social networking Web site owned by News Corp., said Tuesday it will cut nearly 30 percent of its work force, or about 420 jobs.

And Cessna Aircraft Co., the nation’s largest builder of corporate jets, said Friday it will cut 1,300 jobs by August, on top of 6,900 layoffs that it previously announced.

Among the states, Pennsylvania reported the largest increase in initial claims for the week ending June 6. It attributed the increase of 6,861 claims to layoffs in the construction, service and transportation industries. The next largest increases were in Florida, Ohio, California and New York.

Arkansas had the largest decrease of 1,206, which it attributed to fewer layoffs in the auto industry. The next largest drops were in Puerto Rico, Wisconsin, Arizona and Nebraska.

Ten large U.S. banks will finish repaying about $68 billion in bailout money Wednesday, marking a new phase for the most visible government effort to relieve the credit crisis, the Treasury Department said.

Treasury said last week the banks could begin repaying money they received last fall under the $700 billion financial system bailout known as the Troubled Asset Relief Program, or TARP. The program was the centerpiece of the government effort to relieve a global credit crunch and teetering financial markets in October.

The banks have since been negotiating with Treasury over the prices of stock warrants they issued as part of the TARP deal. When Treasury made its initial investments, it received the warrants, which give it the opportunity to buy the banks’ common shares in the future at a fixed price. The value of the warrants would depend on the shares’ future performance.

The pricing of warrants has been a point of contention, slowing the repayment process. Banks want to pay less to tear up the warrants than Treasury says they’re worth. But until banks have bought back the warrants, the banks will remain tied to the federal program. Several banks said they had told Treasury they wished to buy the warrants, officially starting the negotiation process.

TARP became a flashpoint for critics of government intervention last fall, when Congress debated whether to commit $700 billion of taxpayer money to the effort.

The banks repaying TARP are some of the industry’s largest, including JPMorgan Chase & Co., American Express Co., Goldman Sachs Group Inc. and Morgan Stanley. BB&T Corp. and U.S. Bancorp. also said they were repaying their TARP money.

In addition to the money they’re returning, the banks have paid Treasury more than $2 billion in dividends that were mandated under the TARP program. Taxpayers also will receive billions in exchange for the warrants, once Treasury and the banks can agree on how to price them.

With Wednesday’s repayments, Treasury will have recovered more than $70 billion distributed under the program, including about $2 billion from earlier repayments by smaller banks.

The repayments don’t necessarily mean Treasury is winding down the program, which injects capital into healthy banks to encourage lending. Treasury officials have said the money could be reinvested in other healthy institutions, ensuring that government support continues to ease the flow of credit.

The size of the repayments far exceeds the $25 billion that Treasury Secretary Tim Geithner projected banks would repay this year.

Banks have been itching to quit TARP because it subjects them to limits on executive compensation and other rules. Before getting permission to repay their money, the banks had to meet a series of government requirements. Nine of the 10 were subject to a “stress test” designed to show how they would withstand a deeper recession.

They also had to raise equity from investors and raise debt without government guarantees. But the banks still rely on some government subsidies, including debt guarantees from the Federal Deposit Insurance Corp. and discounted credit lines from the Federal Reserve.

Wednesday was the first day the banks were eligible to repay the money. Goldman disclosed its plans in letters to congressional leaders Tuesday.

President Barack Obama proposed sweeping new “rules of the road” for the nation’s financial system Wednesday, casting the changes as a critically important response to the economic crisis and the greatest regulatory transformation since the Great Depression.

Obama blamed the financial crisis on “a culture of irresponsibility” that he said had taken root from Wall Street to Washington to Main Street, and he said regulations crafted to deal with the depression of the 1930s had been “overwhelmed by the speed, scope and sophistication of a 21st century global economy.”

The Obama plan would give new powers to the Federal Reserve to oversee the entire financial system and would also create a new consumer protection agency to guard against credit and other abuses that played a big role in the current crisis.

Obama, speaking from the White House, attributed much of the country’s current problem to “a cascade of mistakes and missed opportunities” that occurred over decades.

The Fed’s expanded authority and the rest of the new rules would reach into currently unregulated regions of the financial markets. An 88-page white paper released by the administration detailed an effort to change a regime that Obama’s economic team maintained had become too porous for the innovations and intricacies of today’s financial markets.

Obama said the plan was designed in consultation with lawmakers, regulators and the institutions it seeks to police.

“We seek a careful balance,” Obama said.

The plan would do away with the Office of Thrift Supervision, replacing it with a system aimed at closing gaps in coverage and keeping institutions from shopping for the most lenient bank regulator. The consumer agency would place new restrictions on lenders and mortgage brokers, requiring them to offer simple loans to consumers.

“Mortgage brokers will be held to higher standards, exotic mortgages that hide exploding costs will no longer be the norm, home mortgage disclosures will be reasonable, clearly written, and concise,” Obama said.

The president offered his version of the source of the financial crisis, tracing the troubles to complex financial instruments such as asset-backed securities that ended up concentrating risk. “It was easy money,” he said. “But these schemes were built on a pile of sand.”

The regulatory system either had gaps or overlaps with little accountability, he said.

“Millions of Americans who have worked hard and behaved responsibly have seen their life dreams eroded by the irresponsibility of others and the failure of their government to provide adequate oversight,” Obama said.

The financial sector and lawmakers from both parties concede the need for significant changes in the rules that govern the intricate and interconnected world of banking and investment. But the details of Obama’s proposal already are facing resistance, signaling a tough sell for a president who is spending major political capital on his health care overhaul.

Under Obama’s plan, the Federal Reserve would gain power to supervise holding companies and large financial institutions considered so big that their failure could undermine the nation’s financial system. But even as it gained new powers, the Fed would lose some banking authority to the new Consumer Financial Protection Agency.

Obama’s proposal would require the Federal Reserve, which now can independently use emergency powers to bail out failing banks, to first obtain Treasury Department approval before extending credit to institutions in “unusual and exigent circumstances.”

The plan does not attempt major consolidation of turf-conscious regulatory agencies and does not inject itself into an ongoing debate over whether to bring some insurance companies under federal oversight. Administration officials said those efforts would have distracted from the central mission of addressing the weaknesses that led to the current crisis.

The president predicted that critics will find that his efforts go too far or fall short. The expanded Fed role and the new consumer regulator will be subjects of fierce debate in Congress. Many bankers oppose a new consumer protection regulator, and many lawmakers worry the Fed could become too powerful.

In conjunction with the Fed’s authority over large financial institutions and the new consumer agency, Obama also proposed:

• Additional protections for investors, including greater disclosure by hedge funds, regulation of credit default swaps and over-the-counter derivatives that previously operated outside of government oversight, and new conditions on brokers and originators of asset-backed securities.

• A system for the orderly disposition of any troubled, interconnected firm whose failure would pose a risk to the entire financial system, together with rules that insist that financial institutions hold more capital for safety’s sake.

From BlackEnterprise.com:

Profits at the nation’s black owned banks last year plunged to a nine-year low, newly released data shows.

The annual statistics, compiled last month by William Michael Cunningham, senior investment adviser at Creative Investment Research Inc., a Washington D.C. firm specializing in minority banking, illustrated a major decline as some black owned banks suffered big losses tied to securities-related investments.

Buddy Howard, president and banking analyst at Equity Research Services Inc. in Raleigh, North Carolina, said black owned banks, much like the majority of banks, were under intense profit pressures in 2008, and these pressures have extended into 2009. “It was one of the most challenging years the entire industry has had in many years, with earnings pressured by tighter margins, severe asset quality problems and anemic loan demand, which has negatively impacted earning asset growth,” Howard said.

Click here for more.

With companies in no mood to hire, theunemployment rate jumped to 9.4 percent in May, the highest in more than 25 years. But the pace of layoffs eased, with employers cutting 345,000 jobs, the fewest since September.

The much smaller-than-expected reduction in payroll jobs, reported by the Labor Department on Friday, adds to evidence that the recession is loosening its hold on the country. It marked the fourth straight month that the pace of layoffs slowed.

Still, the increase in the nation’s unemployment rate from 8.9 percent in April underscores the difficulties that America’s 14.5 million unemployed are having in finding new jobs. Economists had expected the rate to hit 9.2 percent last month.

If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 16.4 percent in May, the highest on records dating to 1994.

Even with layoffs slowing, companies will be reluctant to hire until they feel certain that economic conditions are improving and that any recovery will last.

Since the recession began in December 2007, the economy has lost a net total of 6 million jobs.

As the recession — which is now the longest since World War II — bites into sales and profits, companies have turned to layoffs and other cost-cutting measures to survive the fallout. Those include holding down workers’ hours and freezing or cutting pay.

The average work week in May fell to 33.1 hours, the lowest on records dating to 1964.

Job losses — while slower in May — were still widespread.

Construction companies cut 59,000 jobs, down from 108,000 in April. Factories cut 156,000, on top of 154,000 in the previous month. Retailers cut 17,500 positions, compared with 36,5000 in April. Financial activities cut 30,000, down from 45,000 in April. Even the government reduced employment — by 7,000 — after bulking up by 92,000 in March as it added workers for the 2010 Census.

Education, health care, leisure and hospitality were among the industries adding jobs in May.

Still, in another encouraging note, job losses in both March and April were less than previously thought. Employers cut 652,000 positions in March, versus 699,000 previously reported. They eliminated 504,000 jobs in April, less than the 539,000 initially estimated.

The deepest job cuts of the recession came in January when 741,000 jobs disappeared, the most since 1949.

Federal Reserve Chairman Ben Bernanke repeated his prediction this week that the recession will end this year, but again warned that any recovery will be gradual.

Many economists believe the jobless rate will hit 10 percent by the end of this year. Some think it could rise as high as 10.7 percent by the second quarter of next year before it starts to make a slow descent. The post-World War II high was 10.8 percent at the end of 1982.

The Fed says unemployment will remain elevated into 2011 given the expectation of tepid recovery.Economists say the job market may not get back to normal — meaning a 5 percent unemployment rate — until 2013. Economic recoveries after financial crises tend to be slower, economists say.

Evidence has been mounting that the recession is letting up, with fresh signs emerging earlier this week.

The number of people continuing to draw unemployment benefits dipped for the first time in 20 weeks, and first-time claims also fell. Manufacturing’s slide is slowing. Builders are boosting spending on construction projects and a barometer of home sales firmed.

Although shoppers remain cautious according to sales results from major retailers, Bernanke and other economists are hopeful that consumers won’t return to the deep hibernation seen at the end of last year.

That’s when the recession hit with brutal force, causing the economy to contract at a 6.3 percent pace, the most in 25 years. Consumers cut their spending at the time by the most in nearly three decades. Economic activity shrank at a 5.7 percent pace in the first three months of this year, despite a rebound by consumers.

Many analysts believe the economy is shrinking at about a 2 percent pace in the current quarter, and that the economy could return to growth as soon as the third quarter. President Barack Obama’s stimulus package should help bolster the economy.

Ripple-effects from General Motors Corp.’s filing for bankruptcy protection — the fourth largest in U.S. history — could muddy the outlook, some analysts said. GM said earlier this week it will close nine factories and idle three others indefinitely as part of its restructuring. The closings, which will take place through the end of 2010, will cost up to 20,000 workers their jobs.