ECONOMY
Too Short A Lifeline

The nation is in a mortgage crisis. More than one out of every 14 mortgages "are delinquent as of the end of September -- a 30-year high." According to the Federal Reserve, "another 2 million families could face foreclosure in the next 2 years." In an effort to stem this tide, Treasury Secretary Henry Paulson this week announced "Project Lifeline," a voluntary private sector initiative. Six major mortgage lenders have agreed to send letters "to truant borrowers detailing how they can 'pause' the foreclosure process for 30 days while the bank evaluates whether they're eligible to modify their loan on better terms." Yet like other Bush administration "solutions" to the economic crisis, this one is nothing more than a short-term "voluntary breather" and would perhaps be more aptly called "Project Band-Aid." "Homeowners at risk of foreclosure are floating 50 feet from shore while Project Lifeline throws them a 30-foot rope," said Sen. Dick Durbin (D-IL). "We need a plan that goes further."

MORE THAN MARKET ADJUSTMENT: Earlier this week, the White House released the rosy President's Economic Report. "The best course of action is often to simply allow markets to adjust," the report said. "Markets naturally self-correct, rewarding good strategies and punishing bad ones. ... [A]ny government actions mitigating the outcomes of risky behavior may create perverse incentives for reckless decisions by borrowers and investors who may come to rely on government interventions." But the current mortgage crisis needs more than this voluntary, markets-based approach. As David M. Abromowitz and Andrew Jakabovics at the Center for American Progress note, "Markets will do their part, but not if they are frozen by a freefall in home prices that sucks in otherwise responsible homeowners. Homes are not just another commodity; when widespread foreclosures drive whole neighborhoods into rapid decline." During the 30-day pause, banks will presumably modify the loans to make them more affordable in the long term. But if history is any guide, this outcome is unlikely. Lenders did very few loan modifications in 2007, at the height of the foreclosure crisis. Moody's, the rating agency, notes that at the end of September, just 3.5 percent of loans reset in 2007 had been modified. "What they actually will do is anybody's guess," The New York Times concludes about Bush's voluntary program.
TOO LATE FOR 'TRUST ME': Last May, Senate Banking Committee Chairman Christopher Dodd (D-CT) convened a meeting of major banks and loan servicers that "promised to 'create a permanent solution,' wherever possible, for troubled subprime borrowers." When the industry fell through on those promises, the Bush administration announced "Hope Now" last fall, another voluntary initiative to "delay interest rate increases for borrowers who hadn't yet gone into default." Project Lifeline involves those same lenders. "If the industry had kept the promises they made last May, the other two efforts might not have been needed," writes The New York Times. "So it's unclear why the administration continues to believe that urging the industry to do more is the most effective way to cope with the foreclosure crisis." Additionally, over the past two months, just 36,000 borrowers have taken advantage of a Hope Now toll-free hotline helping borrowers work out loan troubles. But "fewer than a third of those have actually gotten far enough along in the conversation to get advice for a loan workout." According to Carrie Guzman who works for ACORN and advocates for people dealing with foreclosure, Project Lifeline is too little, too late. "Usually once you've hit that 90 days, it's less than 30 days before your sale of share is set," said Guzman, "and the way this plan is written, it excludes people that are within 30 days of the sale, so it gives people very little time to be able to respond."

LENGTHENING THE LIFELINE: Today, Paulson will be testifying before the Senate Banking Committee. "The members of the committee should quickly disabuse him of any notion he may have that he's doing enough," writes The New York Times. "He should be asked to explain, specifically, what will be different at the end of Project Lifeline's 30-day timeout." American Progress has proposed two plans to restore equilibrium to the housing market. First is the SAFE loan program, which "is modeled after the New Deal's successful Home Owners' Loan Corporation" but uses existing government resources to "purchase pools of loans at current value and refinance those loans that are in default or have negative equity into fully amortizing, fixed-rate loans based on the current value of the property." Second is the Great American Dream Neighborhood Stabilization, or GARDNS, Fund, which would help homeowners in low- and middle-income neighborhoods by providing "money to local housing authorities and non-profit organizations to buy foreclosed properties from banks and return them to productive use as affordable housing."

Under the Radar

TORTURE -- SENATORS VOTE TO BAN WATERBOARDING, McCAIN NOT AMONG THEM: Yesterday, the Senate approved an intelligence bill that bans waterboarding, "temperature extremes and other harsh tactics that the CIA used on al-Qaeda prisoners after the Sept. 11, 2001, attacks." The measure will limit the CIA "to using 19 less-aggressive interrogation tactics outlined in a U.S Army Field Manual." CIA Director Michael Hayden recently acknowledged that the agency had used the tactic of waterboarding on at least three prisoners nearly five years ago. Other administration officials, such as Attorney General Mike Mukasey, have refused to say that waterboarding is torture. The White House has even left open the possibility of using the technique in the future. While Sen. John McCain (R-AZ) has previously called waterboarding "very exquisite torture" and co-sponsored a bill to ban any military use of the technique, he voted against yesterday's Senate bill banning waterboarding -- effectively siding with President Bush, who has vowed to veto the bill.

ETHICS -- REP. LEWIS LEADS IN EARMARKS, DESPITE FEDERAL INVESTIGATION: Rep. Jerry Lewis (R-CA), under investigation for funneling money to a contributor's clients, "was among the top lawmakers securing money for special projects in this year's spending bills," according to Taxpayers for Common Sense. Lewis ranked second among all House members in "solo earmarks." Though the current status of the Lewis investigation is uncertain, in May 2006, "federal authorities in Los Angeles began looking into the relationship between Lewis and Washington lobbyist Bill Lowery, a former congressman from San Diego." In 2007, "Lewis collected $59,000 in donations from Lowery, members of his lobbying firm, and clients, some of whom received earmarks supported by Lewis." The investigation is an offshoot of the Randy "Duke" Cunningham case, in which the former congressman is serving jail time after pleading guilty to accepting bribes.

ECONOMY -- ADMINISTRATION SHUTS DOWN WEBSITE TRACKING U.S. ECONOMIC INDICATORS: With the U.S. economy faltering, conservatives have attempted to deflect attention from the crisis by blaming the media's negative coverage and insisting the United States is not headed toward a recession, despite what economists are predicting. The Bush administration's latest move is to simply hide the data. Forbes had awarded EconomicIndicators.gov one of its "Best of the Web" awards. As Forbes explains, the government site provides an invaluable service to the public for accessing U.S. economic data. Economic Indicators is particularly useful because people can sign up to receive e-mails as soon as new economic data across government agencies becomes available. While the data will still be available online at various federal websites, it will be less readily accessible to members of the public. The Bush administration has decided to shut down this site because of "budgetary constraints," effective March 1, even though Bush recently submitted a record $3.1 trillion budget to Congress for FY '09.

Think Fast

Steven Bradbury, the acting head of the Justice Department's Office of Legal Counsel, will testify today that the "set of interrogation methods authorized for current use is narrower than before, and it does not today include waterboarding." In 2005, Bradbury signed two secret legal memos that authorized the CIA to use waterboarding when questioning terror detainees.

As climate change is an important national security issue, the consequence of the Pentagon's "failure to prepare" for the fallout from global warming "could result not just in lost dollars but also in lost lives," writes John Podesta and Peter Ogden of the Center for American Progress.

"Rush Limbaugh, Sean Hannity and Michael Savage are the top three 'most important' talk radio hosts in the country, according to the annual 'Heavy Hundred' list released yesterday by Talkers magazine."

Imad Mugniyah, a top Hezbollah commander that killed hundreds of Americans in the 1980s, died Tuesday night in Damascus, Syria, when a bomb detonated under the vehicle he was in. America and Israel are now preparing for the prospect of a Hezbollah counterstrike. Spencer Ackerman has more.

"Waves of new Iraqi detainees" have inundated the country's already overburdened prisons and courts" since the U.S. troop increase last year, American officials say. Iraq's "justice system does not have enough prison beds, investigative judges or lawyers to absorb the thousands of suspects that have been detained since last summer."

In a 229-191 vote yesterday, the House rejected a 21-day extension of the Protect America Act yesterday. The "broad spying powers temporarily approved" in August now "appear likely to lapse this week."

Lawyers for detainees at Guantanamo Bay say the government may have "violated a federal court order by losing or erasing several years' worth of digital video recordings" of interrogations at the prison. Gitmo's commander, Rear Adm. Mark H. Buzby, admitted recently that "recordings in several areas of the facility have been automatically overwritten and no longer exist."

And finally: Supreme Court Justice Sam Alito convicts "The Sopranos." He said the hit HBO show spreads "stereotypes about Italian-Americans," arguing that the show "not only associated Italian-Americans with the Mafia, but New Jerseyans, as well." "You have a trifecta -- gangsters, Italian-Americans, New Jersey -- wedded in the popular American imagination," Alito said.

Good News

"The Senate voted to ban waterboarding and other harsh interrogation methods that have been used by the CIA against high-level terrorism suspects."

State Watch

CALIFORNIA: "Los Angeles County healthcare officials unveiled a draft cost-cutting plan Wednesday that calls for closing all but one of the county's dozen clinics."

MASSACHUSETTS: "One in every 10 patients admitted to six Massachusetts community hospitals suffered serious and avoidable medication mistakes."

HEALTH CARE: "The U.S. and state governments spent $979 billion on senior benefits in 2007, up 35% from 2000."

Blog Watch

THINK PROGRESS: White House Press Secretary Dana Perino on permanent bases: it depends on how you define "permanent."

INFORMED COMMENT: New Iraqi laws were passed without an actual vote.

POTOMAC FLACKS: Former White House Press Secretary Scott McClellan lands a new job.

TAPPED: Sportsmen, including a descendant of Davy Crockett, come out in favor of climate change legislation.

Daily Grill

"[Waterboarding] is not a complicated procedure. It is torture."
-- Sen. John McCain (R-AZ), 10/26/07

VERSUS

"Mr. McCain voted 'no' on Wednesday afternoon."
--New York Times, 2/13/08