New York (CNNMoney.com) - President Obama's foreclosure prevention program will likely fall far short of its goal and may even do more harm than good, a government watchdog said Tuesday.
The Special Inspector General for the Troubled Asset Relief Program said the Treasury Department set targets that weren't "meaningful," mismanaged the implementation of the program, and now risks a substantial number of "re-defaults," with many participants ultimately losing their homes anyway.
The administration's $75 billion loan modification program may help as little as 1.5 to 2 million people, about half the number Obama said it would when he first unveiled the program in February 2009, the inspector general, Neil Barofsky, wrote in a report.
New York (CNNMoney.com) - President Obama called on Congress Tuesday to recycle $30 billion of the remaining Troubled Asset Relief Program (TARP) funds into a new government lending program offering super-cheap capital to community banks that boost their small business lending this year.
Touted last week in Obama's State of the Union address, the plan is the latest incarnation of a proposal the president first floated in October. While credit conditions for large businesses have improved over the past year, small companies are still widely reporting problems finding the capital they need to fund their operations.
Since small businesses employ about half of American workers, policymakers worry that the ongoing credit crunch they face is contributing to the nation's high rate of job losses. Improving the job market "must be our No. 1 focus in 2010," Obama said last week.
At a town hall meeting in Nashua, N.H., Obama unveiled his proposed new Small Business Lending Fund. The initiative targets banks with assets of under $10 billion, which collectively account for more than half of the nation's small business lending, according to White House estimates.
NEW YORK (CNNMoney.com) - Former Federal Reserve Chairman Paul Volcker said Thursday that more needs to be done to regulate the financial system before the lessons of the recent crisis are forgotten.
"We must not shrink away from change but accept the need for basic financial reform," said Volcker, currently chairman of President Obama's Economic Advisory Board, in remarks to the Economic Club of New York.
He said the economy appears to be growing slowly, and that the financial crisis is beginning to seem to some like a "bad dream."
But the magnitude of the crisis showed that the underlying problems are "more fundamental" and require "broad reform" of the financial system, he warned.
NEW YORK (CNNMoney.com) - President Obama on Thursday called on Congress to tax the largest banks to ensure that U.S. taxpayers don't lose a penny from the federal bailout of the financial, auto and insurance industries over the past year.
The "financial crisis responsibility fee" would target major institutions. It would be levied on those that were the main contributors to the financial crisis and the most significant beneficiaries of the extraordinary actions taken by the Federal Reserve and the Treasury Department.
"My commitment is to recover every single dime the American people are owed," Obama said. "We want our money back and we're going to get it."
The CEO's of some of the nation's largest banks were sworn in Wednesday during a hearing of the Financial Crisis Inquiry Commission. (Photo Credit: Getty Images)
NEW YORK (CNNMoney.com) - Four top bank chief executives told a panel probing the financial crisis Wednesday that they made mistakes but didn't realize how bad they were at the time.
In a heated exchange in Washington with the head of the Financial Crisis Inquiry Commission, Lloyd Blankfein, Goldman Sachs' CEO, agreed the banks had assumed too much exposure to risk at the height of the crisis, and he wished he could go back and change things.
"Anyone who says I wouldn't change a thing, I think, is crazy," Blankfein said. "Knowing now what happened, whatever we did, whatever what the standards of the time were - It didn't work out well."
"Of course, I'd go back and wish we had done whatever it took not to find ourselves in the position we found ourselves in," he added.
New York (CNNMoney.com) - The White House is considering a tax on financial institutions to ensure that taxpayers who bailed out banks get paid back, a senior administration official said Monday.
The law that created the $700 billion Troubled Asset Relief Program empowered the president to ask Congress to recoup money if bailouts were not paid back in full.
TARP dictates that the Office of Management and Budget consider such action five years after TARP went into effect in October 2008 to prevent the federal bailout from adding to the deficit.
When the TARP bill was hastily debated, the provision was key to winning enough support from wary lawmakers to push the bill through Congress.
Robert Gibbs, the White House press secretary, would not discuss how a possible bank fee would fit into Obama's fiscal year 2011 budget, which is set to be released next month. "When it comes back from Kinko's, we'll be able to talk about it," he said.
But Gibbs said it is the president's "goal" to ensure the "money that taxpayers put up will be paid back in full."
Washington (CNNMoney.com) – As lawmakers start trickling back to Washington next week, a panel tasked with investigating the financial crisis is set to make its first big splash.
The Financial Crisis Inquiry Commission, a 10-member panel appointed last summer by Congress, will hold public hearings on Wednesday and Thursday.
First up are four chiefs of some of the best-known and largest banks: Goldman Sachs, Morgan Stanley, J.P. Morgan Chase and Bank of America.
The panel's chairman, Philip Angelides, said he's interested in hearing about the banks' role in creating the crisis as well as finding out how they became "too big to fail." The federal government stepped in to prop up the banks in fall 2008, creating the Troubled Asset Relief Program to help provide them with liquidity.
"My main message in today's meeting was very simple: America's banks received extraordinary assistance from American taxpayers to rebuild their industry," Obama said. "Now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy."
Updated: 1:18 p.m.
Washington (CNN) – On the eve of a White House meeting where President Obama is expected to encourage the nation’s largest lenders to loosen up credit, personal finance expert Suze Orman says Obama should not get all of the blame for how some banks have behaved in the last year.
“It’s not all the president’s fault,” Orman said Sunday on CNN’s State of the Union.
“You can pass every law that you want. You can try to do anything in the world – give these institutions money - if they don’t help their customers, what are you going to do about it?” Orman told CNN Chief National Correspondent John King.
Related: Obama adviser slams Wall Street
“I think a big part of this problem falls right back to the banks especially those with credit cards,” Orman also told King.
Asked what she would say if she had a seat at Monday’s meeting with the heads of the nation’s largest banks, Orman let loose.