Consumer Spending Worries Send Stocks Lower
Associated Press
Transcript
volatility kicked in again on Wall Street with the worry that few Industries are safe from the consumer spending slump the market lifted off its lows from earlier in the session after the government and the mortgage industry announced new actions to help homeowners renegotiate delinquent loans the Auto industry found Reason for Hope after house Speaker Nancy Pelosi called for emergency and limited financial assistance for struggling car makers but the troubles in the Auto industry continue to weigh on investors until we find uh cons consumers are more willing to go out and purchase once again as well as being able to get the financing in which to purchase these cars uh we're probably going to be looking at fairly depressed levels of Auto Sales after falling more than 300 points the Dow Jones Industrials average closed down 177 points at 8694 broader stock indicators also were down the S&P 500 Index dropped 20 to 899 the NASDAQ composite index fell 36 to 1581 Tuesday's losses Illustrated that although the mortgage crisis that spawn the current situation is being addressed in some quarters the economy remains extremely troubled Mark Hammer the Associated Press
Government Considering Mortgage Program Changes
Associated Press
Transcript
the hope for homeowners uh program was designed really to be uh focused on the people in the most difficult situation and you know frankly the bar is fairly high for PE for lenders to be able to participate in that program they need to write the principal down to 90% of the home value uh they need to uh write uh uh bring the payments down to a point where it's uh 31% of the person's income uh you know there's a requirement uh in there's some requirements in how we deal with second lean holders that make it somewhat of a challenging program now the most recent Bill the esa Bill allows HUD to take care of some of those issues and I frankly believe that we need to Avail ourselves of the flexibility that's provided in that bill to expand the relevance of that program and we're working very hard we've got a uh you know you may not realize but hope for homeowners actually has a board that has Representatives from the FDIC the FED Treasury and HUD that board has to agree on all changes but we're working actively with the board to try to drive through changes to expand the applicability of the program
Obama, Pelosi Want Help for Auto Industry
Associated Press
Transcript
[Music] One week after winning the presidential election, Barack Obama took a brief break from mapping out his administration to mark Veterans Day. The president-elect, accompanied by an Iraq war veteran, placed a wreath at a memorial in Chicago. Obama also made a pledge that America will serve veterans as well as they have served their country. The war on terror and the financial crisis will be top issues during Obama's administration, but he's calling for steps to be taken even before he takes office in January. Obama aids say he brought up the struggling economy Monday when he met with President Bush at the White House. During the talks, Obama urged Bush to provide extra help to US automakers. General Motors has warned it's rapidly running out of cash and Ford says its situation is only slightly better. Now, Democratic aids say House Speaker Nancy Pelosi backs a bailout for the auto industry, and she reportedly wants it done in a postelection session when Congress convenes in the next few days. When it comes to the auto industry and the overall economy, Americans seem to have confidence in Obama. An Associated Press GFK poll indicates seven and 10 believe the president-elect will be able to turn the stalling economy around. Immediately after I become president, I'm going to confront this economic crisis head on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity. But for now, Obama is sticking to his post-election view. The country has only one president at a time, and it's still Bush. Obama won't attend this weekend's global economic summit hosted by the president. Instead, aids say Obama will stay in Chicago to work on the transition. Mark Smith, the Associated Press.
Paulson: Troubled Assets Will Not Be Purchased
Associated Press
Transcript
as credit markets froze in mid-september the administration asked congress for broad tools and flexibility to rescue the financial system we asked for 700 billion dollars to purchase troubled assets from financial institutions at the time we believe that would be the most effective means of getting credit flowing again during the two weeks that congress considered the legislation market conditions worsened considerably it was clear to me by the time the bill was signed on october 3rd that we needed to act quickly and forcibly and that purchasing troubled assets our initial focus would take time to implement and would not be sufficient given the severity of the problem in consultation with the federal reserve i determined that the most timely effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks
Stocks Plunge for Third Straight Session
Associated Press
Transcript
Wall Street suffered its third straight loss Wednesday as investors absorb more dismal corporate reports and news that the government won't buy Bank soured mortgage assets after all Macy's led the way early in the day by reporting a sharp drop in sales Best Buy slashed its 2009 outlook on fears the consumer spending will keep eroding really I think most investors just don't know how deep it's going to be they know that the retailers are expected to be weak they just don't know how weak and as a result every day we end up seeing stocks that are sold off 5% 10% or more treasury secretary Henry pson had more potentially disheartening news for investors he announced the government will not be purchasing Banks troubled assets and will instead buy stakes in the banks the problem is that the rules are changing after the game has already started and I think as a result investors are now worried that this is again becoming much more of an ad hoc approach to solving the problem problem selling accelerated in the last hour of the day as it's done over the past 2 months in the Dow end of the day down 411 points at 8283 the standard and pores 500 Index dropped 47 to 852 the NASDAQ deposite index stumbled 82 to 1499 many analysts believe the market is in the process of retesting the intraday low hit on October 10th when the Dow fell to 7882 another trading session like this one in that low can EAS easily be breached markk hamri the Associated Press
Video Essay: Losing the American Dream
Associated Press
Transcript
it's the american dream to own a home that dream becomes so dampened and distraught when you have these lenders out there that prey on i believe vulnerable people my home was in foreclosure and the sale date was august 4th i had filed for bankruptcy to stop you know to prevent that from happening then i was refinanced into a new loan i learned that they're a hard equity lender and their loan is really based on the equity in your home not your ability to pay well the monthly payment is over three thousand dollars a month my income brings in just about you know much less than that these hard equity lenders they should be regulated they should never be allowed to provide a loan to a homeowner without their ability to pay it's my home it's my first home that i was able to buy and you know i would pay for it to be taken away you know without without a fight those of you who have already signed up just continue over there we're going to give you numbers and then we're going to assign you a place to go like a triage system in an emergency room depending on your individual situation with your mortgage will determine which table you go to i decided to form this task force for everyone in palm beach county who's a homeowner to sit down with a representative from their banks from loan officers uh with attorneys with realtors with credit counselors to try to find a solution to their mortgage problems to save their home so what we're offering today is not a miracle uh but hope i am not a hundred percent sure how much time i have um so let us stand still now my daughter keeps on asking me when are we gonna finish painting not sure yet um she is not sometimes she asks you know the question of mommy you know are we going to lose the house you know you know where are we going to go it's heartbreaking when you when they have to ask you these questions the economy is in in a devastated position right now so isn't it more beneficial to us and to the economy if you work with the homeowners and provide them the means of maintaining their home and start making the payments and putting it back into the economy this is america you know i'm proud of america america would bounce back
Will New Mortgage Assistance Program Do the Job?
Associated Press
Transcript
with more than 4 million homeowners behind on their mortgage payments the government and major banks are scrambling to help at-risk borrowers avoid foreclosure welcome I Tuesday the Federal Housing Finance Agency which recently took control of mortgage giants Fannie Mae and Freddie Mac's announced a new loan modification program along with other government and industry officials foreclosures hurt families their neighbors whole communities and the overall housing market we need to stop this downward spiral the new program will go into effect next month and will be open only to certain borrowers the government isn't sure how many people will be affected but those who qualify could see their interest payments reduced or their loans extended the program is meant to speed up the process for we negotiating hundreds of thousands of loans held by Fannie Mae and Freddie Mac as the regulator of Fannie Mae Freddie Mac and the Federal Home Loan Banks the Federal Housing Finance Agency strongly supports fannie and freddie's leadership role and setting industry standards for these at-risk bars the program does have its critics however who are calling it too little too late sheila bair the head of the FDIC the agency that ensures bank deposits says the program is a step in the right direction but she says it falls short of what's needed Mike gracia The Associated Press
Automakers Running On Empty
CBS
Transcript
treasury secretary henry paulsen goes before congress today to update them on the government's 700 billion bailout program this says house speaker nancy pelosi is leading the call for a rescue of the battered auto industry cbs news business correspondent correspondent anthony mason reports the emergency rescue package for the auto makers would come from the 700 billion dollar bailout fund that congress authorized the administration has the authority they should act if they refuse to use their authority then the congress will have to take steps next week gm sales fell 45 in october it's bleeding 2 billion in cash a month and can't borrow the world's biggest automaker is on the brink of bankruptcy if gm were to go bankrupt it is very very likely that chrysler would follow that ford would follow that other manufacturers would follow and certainly a host of suppliers if even one of the big three fails according to a new study two and a half million jobs could be lost as the impact spreads from workers to dealers to suppliers like jamestown industries an independent supplier of components to the gm truck plant in moraine ohio but the plant will shut down on december 23rd and jamestown will go down with it two days before christmas 120 employees will be out of work we're just an example of what's going on everywhere gm ford and chrysler are looking for a bridge loan of at least 25 billion dollars but critics argue the government shouldn't bail out bad management if american taxpayers are forced to subsidize auto producers can we at least get to pick the good ones even if the government throws detroit a rescue line some analysts say it won't be enough to save all three automakers anthony mason cbs news new york the crisis in the auto industry is of course having a direct impact on the state of michigan governor jennifer granholm joins us this morning from east lansing good morning governor good morning maggie of course no one wants the auto industry to collapse but there are lots of companies and individuals in this country who would love for someone to come in and dig them out of their economic messes how do you justify this for this industry first of all this industry supports one in 10 jobs in the country if this industry is allowed to fail there will be a ripple effect throughout the nation in communities like the piece that you just described happening all over from coast to coast this government decided that it was going to step in and throw 700 billion dollars at the financial sector can we're just asking for a fraction of that in fact they gave 150 billion dollars to one company aig this industry supports a huge number of jobs it supports the manufacturing sector of this nation do we want to have a manufacturing sector this is so i just have to tell you maggie the crisis is real this is urgent the national economy rests on this and by the way our energy future rests on this if we want to have energy independence it's the automobile the electric vehicle the vehicle that runs on biofuels and not oil from the middle east that will get us there are we going to seed that territory to international companies are we not going to have an energy manufacturing sector in this nation driven by an automobile that is electric i'm telling you the ramifications here are very serious the time is urgent governor the the automakers who focus more on those types of vehicles that you're describing are doing better than the ones that are in trouble why should we bail out the ones who made the mistakes shouldn't they dig themselves out of their own hole let's be very clear this domestic auto industry has been in the middle of restructuring now for three years they have got i mean just general motors has 17 models in the pipeline now which have get more than 30 miles to the gallon they have the volt which is supposed to come online in 2010 the purely electric vehicle that the battery that runs the electric vehicle and the hybrid vehicles right now they're manufactured assembled r d in asia so if you have your batteries you have the next generation of batteries in asia you have oil in the middle east that means america's energy independence has been seeded to other parts of the world this is critical to have a domestic auto industry the issues that you're talking about with respect to how you know the pipeline of vehicles coming on that's exactly what this domestic auto industry is doing they want to lead the nation in producing those kinds of vehicles they didn't see this financial crisis coming any more than anybody else did but the fact that people can't buy vehicles now because credit has been locked tight the fact that consumer confidence is through the floor is a result of the financial crisis that's gone on from wall street this auto industry would not be asking for a bailout for not be asking for 25 billion as a bridge loan were it not for the meltdown on wall street which we've already decided we're going to give 700 billion to governor i'm sorry i have to interrupt but we are out of time i just want to note for the viewers how many times you said the word energy in that interview with all the rumors about you possibly being tapped as energy secretary just an interesting observation care to comment in five seconds i i'm interested in helping this auto industry and being governor of michigan final answer you
Big Changes To Bailout Plan
CBS
Transcript
Treasury Secretary Henry Pollson abandoned the key strategy of the $700 billion financial rescue package. The government is no longer going to buy assets from troubled financial institutions as promised. I will never apologize for for changing an approach or strategy when the facts change. Instead, Pollson wants to use the cash to buy back bank stocks, giving banks more money to lend. And new emphasis will be put on helping people with credit card debt, auto loans, and student loans. But it could take weeks to design the plan, and it may not be in place before President Bush leaves office. We will continue to brief President-elect Obama's transition team on all of these issues. Pollson announced changes to the government's bailout plan as congressional Democrats are pushing for another bailout for the auto industry. The big three automakers are all at risk of going out of business. GM lost $2.5 billion last quarter and could run out of money next year. Michigan lawmakers are crafting a plan that would allow the auto industry to receive 25 billion in loans under the $700 billion bailout plan. While some congressional leaders are pushing for an even bigger package, but no one has explained where the money will come from for another massive financial rescue. Tara Burgger for CBS News, Washington.
Should Congress Bail Out The Auto Industry?
Associated Press
Transcript
with General Motors warning it may run out of money by the end of the year Democrats on Capitol Hill are hurrying to put together a bailout package for the industry bailot proponents say the Auto industry is key to the US economy this is not just someone crying wolf this is a serious economic recession potentially a depression in the auto sector Democrats are drafting legislation that would dip into the $700 billion Wall Street rescue package that was approved by Congress last month Auto executive labor leaders and others want an immediate $25 billion loan to keep the companies operating and more money to help cover the auto company's Future Health Care obligations but opponents say the government should stay out of the marketplace I think the best solution is to allow the market to work here if one of the companies was to go bankrupt uh and liquidate prospects for the other two would be much greater because they would have a much larger slice of the market President Bush appears cool to the Democrats proposal although his press AR says he's open to helping the troubled industry and Wednesday his treasury secretary called the auto sector critical but said the financial industry rescue wasn't designed for car companies even so the house may vote on The Proposal as early as next Thursday Mike graia the Associated Press