As the state debates whether or not to drill off the coast of South Carolina, to find out if there's anything off our coast worth drilling for.
Some scientists say drilling off South Carolina's shore is not worth it. However, their answer changes a bit when you're talking about drilling hundreds of miles away.
The price of gas is up. The priority for getting more oil is way up. The possibility of it coming from our coast is the highest it's been in more than a decade.
But, experts say right off our Carolina coast you won't find much.
Some feel the east coast is a lot different the the gulf coast, as in there's not much in reserves in shore close to the coast.
However, others say if you plunge into the depths of the ocean far off our shore, there's a good chance you'll find natural gas and the thick levels of sediment with high potential to be gas are located hundreds of miles off shore. The thing is, no one's ever really tested it.
It's not like going and digging a water well on land. Anything you do in the marine environment, particularly deep water, is quite challenging and as a result, quite expensive.
But as prices continue to get higher at the pump, the cost of finding offshore material may become a little more realistic. However, even if scientists figure out what's out there, it doesn't answer the question of whether we should go after it.
Either way we should start saving the fuel we do have in addition to using other forms of energy, like renewable energy.
We can find all the oil we want, it's still going to be expensive. We've got an economic issue that's not going to go away and we need to solve it.
Scientists are already exploring wind energy potentials off our coast.
Saturday, July 19, 2008
Tropical Storm Cristobal
Tropical Storm Cristobal churned off the Southeast seaboard after it formed Saturday, the first storm to threaten the U.S. this hurricane season, forecasters said.
The storm strengthened from a tropical depression, generating maximum sustained winds of about 45 mph as it promised to bring much-needed rains to the parched eastern Carolinas.
At 5 p.m. EDT, the center of the storm was about 125 miles east of Charleston and about 205 miles southwest of Cape Hatteras, N.C. The National Hurricane Center said Cristobal was moving northeast at about 7 mph.
Although the center of the storm was forecast to remain off the coast through the weekend, tropical storm warnings were in effect from the South Santee River in South Carolina to the North Carolina-Virginia state line, including Pamlico Sound.
Flood advisories were posted for coastal counties and Wilmington, N.C., received 2 1/2 inches of rain Saturday, said Stephen Keebler, a meteorologist at the National Weather Service there. Cristobal's winds were not expected to be a problem, Keebler said.
"It's some rain and a little bit of relief for the coastal areas and a lot of excitement, but that's about it," he said.
The rain bands were weakening as they spun farther inland, providing little relief for parched areas near Interstate 95 in North Carolina, he said.
Forecasters predicted up to 5 inches of rain along the North Carolina coast, with heavier amounts in some areas.
Eastern North Carolina is under a moderate drought while areas along South Carolina's northern coast are considered abnormally dry, according to the U.S. Drought Monitor. Officials have blamed the persistent drought for a massive wildfire that has burned more than 40,000 acres in eastern North Carolina since it began June 1 with a lightning strike.
As Cristobal lurked offshore, the storm was keeping many boaters off the waters — and surfers in the waves.
"There's not a lot of boat traffic on the water," said Gray Wilson, working at the Wrightsville Beach Marina in Wrightsville Beach, N.C. Although he added most boaters did not appear overly concerned about Cristobal, "people have been staying in."
On North Carolina's Outer Banks, surfers reveled in the waves as the storm churned offshore well to the south.
Bradley Rose, a surf instructor at SandBarz in Carolina Beach, N.C., said the waves were a bit choppy.
"It looks pretty fun out there," Rose said.
At the By The Sea Motel in North Myrtle Beach, S.C., out-of-state vacationers took to the beach trying to photograph the outer rainbands of Cristobal, said hotel manager Charlie Peterson. Intermittent light rain showers during the afternoon were not enough to chase them away and there were even brief moments of sunshine.
"They've got their cameras set and they think there is going to be lightning over the water and all," he said. "They have never seen this."
Elsewhere Saturday, Hurricane Fausto strengthened far off Mexico's Pacific coast, while Hurricane Bertha raced rapidly to the northeast over the North Atlantic, hundreds of miles off the coast of Newfoundland, Canada. Neither of those storms currently threaten land. Bertha had blustered across Bermuda earlier this week, knocking out electricity to thousands there.
The storm strengthened from a tropical depression, generating maximum sustained winds of about 45 mph as it promised to bring much-needed rains to the parched eastern Carolinas.
At 5 p.m. EDT, the center of the storm was about 125 miles east of Charleston and about 205 miles southwest of Cape Hatteras, N.C. The National Hurricane Center said Cristobal was moving northeast at about 7 mph.
Although the center of the storm was forecast to remain off the coast through the weekend, tropical storm warnings were in effect from the South Santee River in South Carolina to the North Carolina-Virginia state line, including Pamlico Sound.
Flood advisories were posted for coastal counties and Wilmington, N.C., received 2 1/2 inches of rain Saturday, said Stephen Keebler, a meteorologist at the National Weather Service there. Cristobal's winds were not expected to be a problem, Keebler said.
"It's some rain and a little bit of relief for the coastal areas and a lot of excitement, but that's about it," he said.
The rain bands were weakening as they spun farther inland, providing little relief for parched areas near Interstate 95 in North Carolina, he said.
Forecasters predicted up to 5 inches of rain along the North Carolina coast, with heavier amounts in some areas.
Eastern North Carolina is under a moderate drought while areas along South Carolina's northern coast are considered abnormally dry, according to the U.S. Drought Monitor. Officials have blamed the persistent drought for a massive wildfire that has burned more than 40,000 acres in eastern North Carolina since it began June 1 with a lightning strike.
As Cristobal lurked offshore, the storm was keeping many boaters off the waters — and surfers in the waves.
"There's not a lot of boat traffic on the water," said Gray Wilson, working at the Wrightsville Beach Marina in Wrightsville Beach, N.C. Although he added most boaters did not appear overly concerned about Cristobal, "people have been staying in."
On North Carolina's Outer Banks, surfers reveled in the waves as the storm churned offshore well to the south.
Bradley Rose, a surf instructor at SandBarz in Carolina Beach, N.C., said the waves were a bit choppy.
"It looks pretty fun out there," Rose said.
At the By The Sea Motel in North Myrtle Beach, S.C., out-of-state vacationers took to the beach trying to photograph the outer rainbands of Cristobal, said hotel manager Charlie Peterson. Intermittent light rain showers during the afternoon were not enough to chase them away and there were even brief moments of sunshine.
"They've got their cameras set and they think there is going to be lightning over the water and all," he said. "They have never seen this."
Elsewhere Saturday, Hurricane Fausto strengthened far off Mexico's Pacific coast, while Hurricane Bertha raced rapidly to the northeast over the North Atlantic, hundreds of miles off the coast of Newfoundland, Canada. Neither of those storms currently threaten land. Bertha had blustered across Bermuda earlier this week, knocking out electricity to thousands there.
Thursday, July 17, 2008
Weekly Mortgage Applications increased
The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending July 11, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 522.2, an increase of 1.7 percent on a seasonally adjusted basis from 513.4 one week earlier. On an unadjusted basis, the Index increased 27.0 percent compared with the previous Independence Day holiday shortened week and was down 17.4 percent compared with the same week one year earlier.
The Refinance Index increased 6.9 percent to 1474.9 from 1379.3 the previous week and the seasonally adjusted Purchase Index decreased 1.7 percent to 359.7 from 365.8 one week earlier. The Conventional Purchase Index increased 1.4 percent while the Government Purchase Index (largely FHA) decreased 8.2 percent.
The four week moving average for the seasonally adjusted Market Index is up 0.7 percent to 493.7 from 490.2. The four week moving average for the Purchase Index edged up to 350.5 from 350.4, while this average is up 1.8 percent to 1333.9 from 1309.8 for the Refinance Index.
The refinance share of mortgage activity increased to 39.2 percent of total applications from 37.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 9.1 from 10.0 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.22 percent from 6.43 percent, with points increasing to 1.21 from 1.06 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.74 percent from 5.94 percent, with points increasing to 1.13 from 1.10 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 7.16 percent from 7.24 percent, with points increasing to 0.36 from 0.26 (including the origination fee) for 80 percent LTV loans.
The Refinance Index increased 6.9 percent to 1474.9 from 1379.3 the previous week and the seasonally adjusted Purchase Index decreased 1.7 percent to 359.7 from 365.8 one week earlier. The Conventional Purchase Index increased 1.4 percent while the Government Purchase Index (largely FHA) decreased 8.2 percent.
The four week moving average for the seasonally adjusted Market Index is up 0.7 percent to 493.7 from 490.2. The four week moving average for the Purchase Index edged up to 350.5 from 350.4, while this average is up 1.8 percent to 1333.9 from 1309.8 for the Refinance Index.
The refinance share of mortgage activity increased to 39.2 percent of total applications from 37.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 9.1 from 10.0 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.22 percent from 6.43 percent, with points increasing to 1.21 from 1.06 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.74 percent from 5.94 percent, with points increasing to 1.13 from 1.10 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 7.16 percent from 7.24 percent, with points increasing to 0.36 from 0.26 (including the origination fee) for 80 percent LTV loans.
Schoold District moves forward to raise county's sales tax
The measure would be placed on the ballot in November's general election.
How the money raised from the one-cent tax would be spent, however, is a first in South Carolina. Under old legislation, all revenue from such a tax would go solely to the school district. But a new law passed this year allows local school districts to share part of the revenue for capital improvements "on the campuses of a technical college or other state institution of higher learning located in the county." In this case, that would be Coastal Carolina University and Horry-Georgetown Technical College.
Twenty percent of the sales tax would be divided between CCU and HGTC, with the majority going to CCU. The rest would go Horry County schools. Some of the money would be used to pay off already-incurred debt, while the remaining cash would go toward expanding or building new schools.
Members briefly discussed concern that voters would want specificity with regards to how the money would be used instead, not given just general improvement plans. The proposed improvements have not been finalized, but by law, the board, CCU, and HGTC must have the details in writing before it goes to the ballot. If it is passed, the board couldn't use the money for anything other than what it outlines on the ballot.
Why would a district want to share its money? It doesn't have to under the new law, but it has the option. Board Chairman Will Garland said he was an enabler of the new law, and in fact, approached a house member with the idea of sharing.
Garland is also the senior vice-president of finance and administration at Coastal Carolina University. As such, Garland removed himself from discussion of the topic or voting on it Monday night until the State Ethics Commission rules on whether it would cause a conflict of interest.
Board Member Kay Loftus also removed herself, citing her husband's employment with CCU.
Garland thinks by sharing the tax revenue with the schools, the proposal has a better chance of passing. He thinks young college voters will see a benefit and turn out at the polls.
Members say the one-cent-per-dollar sales tax, which could only last 15 years by law, is necessary to keep up with Horry County's growing student population. They expect 1,000 new students each year over the next 15 years.
Board members say by raising the sales tax, the county's property tax would go down. Garland said a "yes" vote means lower property taxes, and a "no" vote means higher property taxes.
The board will meet again July 28th, the same day a draft ballot question is expected to be released.
The district passed a similar penny tax in 2006, but the State Election Commission overturned the tax after two citizens appealed it. They said the school board put out fliers at polling locations that violated voting laws.
How the money raised from the one-cent tax would be spent, however, is a first in South Carolina. Under old legislation, all revenue from such a tax would go solely to the school district. But a new law passed this year allows local school districts to share part of the revenue for capital improvements "on the campuses of a technical college or other state institution of higher learning located in the county." In this case, that would be Coastal Carolina University and Horry-Georgetown Technical College.
Twenty percent of the sales tax would be divided between CCU and HGTC, with the majority going to CCU. The rest would go Horry County schools. Some of the money would be used to pay off already-incurred debt, while the remaining cash would go toward expanding or building new schools.
Members briefly discussed concern that voters would want specificity with regards to how the money would be used instead, not given just general improvement plans. The proposed improvements have not been finalized, but by law, the board, CCU, and HGTC must have the details in writing before it goes to the ballot. If it is passed, the board couldn't use the money for anything other than what it outlines on the ballot.
Why would a district want to share its money? It doesn't have to under the new law, but it has the option. Board Chairman Will Garland said he was an enabler of the new law, and in fact, approached a house member with the idea of sharing.
Garland is also the senior vice-president of finance and administration at Coastal Carolina University. As such, Garland removed himself from discussion of the topic or voting on it Monday night until the State Ethics Commission rules on whether it would cause a conflict of interest.
Board Member Kay Loftus also removed herself, citing her husband's employment with CCU.
Garland thinks by sharing the tax revenue with the schools, the proposal has a better chance of passing. He thinks young college voters will see a benefit and turn out at the polls.
Members say the one-cent-per-dollar sales tax, which could only last 15 years by law, is necessary to keep up with Horry County's growing student population. They expect 1,000 new students each year over the next 15 years.
Board members say by raising the sales tax, the county's property tax would go down. Garland said a "yes" vote means lower property taxes, and a "no" vote means higher property taxes.
The board will meet again July 28th, the same day a draft ballot question is expected to be released.
The district passed a similar penny tax in 2006, but the State Election Commission overturned the tax after two citizens appealed it. They said the school board put out fliers at polling locations that violated voting laws.
Delta cuts flights from Myrtle Beach airport
Myrtle Beach International Airport will lose more flights this fall.
Delta Airlines has announced it will reduce service from Myrtle Beach to Atlanta and eliminate flights to other cities, beginning in September.
A Delta spokesman says service to Atlanta will go from seven flights a day now to five, and flights to Cincinnati and New York will be cut entirely.
The cuts are part of Delta's 13 percent overall reduction in flights to cope with higher fuel costs.
Delta reported a loss of more than $1 billion in the second quarter of this year.
Delta Airlines has announced it will reduce service from Myrtle Beach to Atlanta and eliminate flights to other cities, beginning in September.
A Delta spokesman says service to Atlanta will go from seven flights a day now to five, and flights to Cincinnati and New York will be cut entirely.
The cuts are part of Delta's 13 percent overall reduction in flights to cope with higher fuel costs.
Delta reported a loss of more than $1 billion in the second quarter of this year.
C.A.B. says developers can start Myrtle Beach General Aviation Terminal
Thursday afternoon, the Community Appearance Board approved the project, with a few minor changes to the plan.
The 11,000 square foot general aviation terminal building that will be the first thing people see when they fly into Myrtle Beach.
At the meeting Thursday, the C.A.B. modified the plan.
Horry County officials actually broke ground on the project last month, anticipating the C.A.B.'s approval.
A new general aviation terminal building will replace the current one that's more than fifty years old.
The 11,000 square foot general aviation terminal building that will be the first thing people see when they fly into Myrtle Beach.
At the meeting Thursday, the C.A.B. modified the plan.
Horry County officials actually broke ground on the project last month, anticipating the C.A.B.'s approval.
A new general aviation terminal building will replace the current one that's more than fifty years old.
Wednesday, July 16, 2008
unemployment numbers for our area
The latest numbers from the South Carolina Employment Security Commission show two counties in our area are in the top 10 highest rates in the state.
In May of this year Marion County was at 12.2 percent, Marlboro at 11 percent, further down the list is Dillon County at 9.5 percent and Darlington at 7.4.
Georgetown County came in last month at 6.8 percent followed by Florence at 6.3 percent.
Horry County has the lowest unemployment rate in our area at 5.6 percent.
In May of this year Marion County was at 12.2 percent, Marlboro at 11 percent, further down the list is Dillon County at 9.5 percent and Darlington at 7.4.
Georgetown County came in last month at 6.8 percent followed by Florence at 6.3 percent.
Horry County has the lowest unemployment rate in our area at 5.6 percent.
Tuesday, July 15, 2008
Interest rates end up slightly better
After the roller coaster ride ended last week, rates managed to end up slightly better than where they began. Although the week ahead is jam packed with high impact economic news, it's likely the big market mover this week will be other financial headlines. So what's the skinny with the GSEs (Freddie and Fannie) and just how will it impact rates?
Last week, almost all the positive rate movement earlier in the week was nearly erased as continued speculation as to the financial health of Freddie and Fannie was brought into question. Investors wrestled with the idea that the two mortgage giants that collateralized over $5 trillion in mortgage debt may become insolvent and require a government bail out. Considering that the national debt is less than double the total amount Freddie and Fannie are on the hook for, speculation that even the Federal Government might have trouble raising the necessary capital weighed heavy on investors minds.
Over the weekend, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke outlined a plan to bail out Freddie and Fannie if necessary. Although the plan would require congressional approval. It remains to be seen if investors will feel comforted by the plan.
To make matters even more volatile, the week ahead is jam packed with high impact economic reports that will indicate whether inflation is still a concern. Add to that the Fed's FOMC meeting minutes being released and we have what might be the most volatile week in recent history.
The bottom line: Expect the market to be extremely volatile
Last week, almost all the positive rate movement earlier in the week was nearly erased as continued speculation as to the financial health of Freddie and Fannie was brought into question. Investors wrestled with the idea that the two mortgage giants that collateralized over $5 trillion in mortgage debt may become insolvent and require a government bail out. Considering that the national debt is less than double the total amount Freddie and Fannie are on the hook for, speculation that even the Federal Government might have trouble raising the necessary capital weighed heavy on investors minds.
Over the weekend, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke outlined a plan to bail out Freddie and Fannie if necessary. Although the plan would require congressional approval. It remains to be seen if investors will feel comforted by the plan.
To make matters even more volatile, the week ahead is jam packed with high impact economic reports that will indicate whether inflation is still a concern. Add to that the Fed's FOMC meeting minutes being released and we have what might be the most volatile week in recent history.
The bottom line: Expect the market to be extremely volatile
Monday, July 14, 2008
Signs of a Crummy Real Estate Agent
While a savvy real estate agent can certainly help you sell your home more efficiently, not all brokers are created equal. And in today's feeble real estate market, it's all the more important that an agent go the extra mile on behalf of home sellers. But how can a homeowner tell if an agent is doing everything he or she can to get the property sold or is simply going through the motions? To answer that question, U.S. News recently spoke with a handful of industry professionals and compiled a list of six distinct signs that may indicate that an agent is not 100 percent committed to the effort.
1. Out of pocket. Just as in a marriage, communication is a key component of the relationship between a homeowner and an agent. If the communication isn't there, the relationship won't work. So if your agent doesn't return your phone calls in a timely fashion or disappears without warning for weeks at a time, you should probably find someone else. Some real estate agents will block out a single window of time—say, between 4 and 5 p.m.—in which to return all of their phone calls for that day, says Jay Thompson of Thompson's Realty in Arizona. "I've never really understood that," Thompson says. "That's not necessarily good if your seller or buyer wants to talk to you at 8 o'clock in the morning—they end up waiting a whole day."
2. No advice. Let's face it; even homeowners who have been through several real estate transactions can benefit from a little advice from their agent. But if an agent doesn't offer any advice, it could be an indication that he or she is not fully engaged in the process. "We're not shy people," says Elizabeth Blakeslee of Coldwell Banker Residential Brokerage in Washington, D.C. "If an agent doesn't suggest fixing drippy faucets or reducing clutter—that sort of thing—then they are just going to put [the property] in the multiple listing [service] and throw up a sign and hope." Not exactly the pathway to value in today's sluggish market.
3. Insists on affiliates. Real estate agents who insist on clients' using a particular lender or affiliated company for the transaction should also trigger alarm bells. "That's a huge red flag because odds are they are probably getting a cut on a referral fee," says Joshua Dorkin, the founder and CEO of BiggerPockets.com, a website that specializes in real estate information and networking. "Frankly, you should be able to use whoever you want to use."
4. Part-time gig. Just because a real estate agent has a license doesn't mean it's his or her full-time job. And while some part-time agents are certainly capable, "when you put food on the table for your family selling real estate, you approach things differently," says Mike Sannes in Big Bear Lake, Calif. "If your real estate agent is actually a waiter, waitress, or [another profession], then you are probably not going to be happy with where their priorities are."
5. Keeps it in the family. A real estate agent who shows buyers only properties that are listed with his or her brokerage could be subordinating the client's best interests. Since selling agents earn a separate commission off a real estate transaction, agents who make listings just from their company available may be trying to steer that commission to the brokerage as well. "[If] I only showed you my listings or [the company's] listings, that's a huge red flag because there is a lot of the inventory that you are not considering," Sannes says. "By limiting [the inventory], you are not doing your job representing a buyer."
6. Behavior problems. Every real estate agent is licensed by the state in which he or she practices. State agencies, meanwhile, keep the records of all disciplinary actions taken against their agents. By getting in touch with the agency that oversees the real estate industry in your state, you can find out if there is a disciplinary action on your agent's record. (Contact information for state agencies is available through the Association of Real Estate License Law Officials.) "It's like when you hire a contractor, you go to the state contractor board," says Barbara Cook in San Diego County, Calif. It's also a good idea to check with the state agency simply to ensure that your agent is in fact licensed—as scam artists have been known to pose as real estate agents to perpetrate fraud.
1. Out of pocket. Just as in a marriage, communication is a key component of the relationship between a homeowner and an agent. If the communication isn't there, the relationship won't work. So if your agent doesn't return your phone calls in a timely fashion or disappears without warning for weeks at a time, you should probably find someone else. Some real estate agents will block out a single window of time—say, between 4 and 5 p.m.—in which to return all of their phone calls for that day, says Jay Thompson of Thompson's Realty in Arizona. "I've never really understood that," Thompson says. "That's not necessarily good if your seller or buyer wants to talk to you at 8 o'clock in the morning—they end up waiting a whole day."
2. No advice. Let's face it; even homeowners who have been through several real estate transactions can benefit from a little advice from their agent. But if an agent doesn't offer any advice, it could be an indication that he or she is not fully engaged in the process. "We're not shy people," says Elizabeth Blakeslee of Coldwell Banker Residential Brokerage in Washington, D.C. "If an agent doesn't suggest fixing drippy faucets or reducing clutter—that sort of thing—then they are just going to put [the property] in the multiple listing [service] and throw up a sign and hope." Not exactly the pathway to value in today's sluggish market.
3. Insists on affiliates. Real estate agents who insist on clients' using a particular lender or affiliated company for the transaction should also trigger alarm bells. "That's a huge red flag because odds are they are probably getting a cut on a referral fee," says Joshua Dorkin, the founder and CEO of BiggerPockets.com, a website that specializes in real estate information and networking. "Frankly, you should be able to use whoever you want to use."
4. Part-time gig. Just because a real estate agent has a license doesn't mean it's his or her full-time job. And while some part-time agents are certainly capable, "when you put food on the table for your family selling real estate, you approach things differently," says Mike Sannes in Big Bear Lake, Calif. "If your real estate agent is actually a waiter, waitress, or [another profession], then you are probably not going to be happy with where their priorities are."
5. Keeps it in the family. A real estate agent who shows buyers only properties that are listed with his or her brokerage could be subordinating the client's best interests. Since selling agents earn a separate commission off a real estate transaction, agents who make listings just from their company available may be trying to steer that commission to the brokerage as well. "[If] I only showed you my listings or [the company's] listings, that's a huge red flag because there is a lot of the inventory that you are not considering," Sannes says. "By limiting [the inventory], you are not doing your job representing a buyer."
6. Behavior problems. Every real estate agent is licensed by the state in which he or she practices. State agencies, meanwhile, keep the records of all disciplinary actions taken against their agents. By getting in touch with the agency that oversees the real estate industry in your state, you can find out if there is a disciplinary action on your agent's record. (Contact information for state agencies is available through the Association of Real Estate License Law Officials.) "It's like when you hire a contractor, you go to the state contractor board," says Barbara Cook in San Diego County, Calif. It's also a good idea to check with the state agency simply to ensure that your agent is in fact licensed—as scam artists have been known to pose as real estate agents to perpetrate fraud.
Sunday, July 13, 2008
shoring up mortgage giants Fannie Mae and Freddie Mac
The Federal Reserve and the U.S. Treasury announced steps Sunday to shore up mortgage giants Fannie Mae and Freddie Mac, whose shares have plunged as losses from their mortgage holdings threatened their financial survival.
The Federal Reserve said it granted the Federal Reserve Bank of New York authority to lend to the two companies "should such lending prove necessary." If the companies did borrow directly from the Fed, they would pay 2.25 percent — the same rate given to commercial banks and Big Wall Street firms.
Secretary Henry Paulson said the Treasury is seeking authority to expand its current line of credit to the two companies should they need to tap it and to make an equity investment in the companies — if needed. Such moves will require congressional approval.
"Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owner companies," Paulson said Sunday. "Their support for the housing market is particularly important as we work through the current housing correction."
The Treasury's plan also seek a "consultative role" for the Federal Reserve in any new regulatory framework eventually decided by Congress for Fannie and Freddie. The Fed's role would be to weigh in on setting capital requirements for the companies.
Fannie Mae and Freddie Mac either hold or back $5.3 trillion of mortgage debt. That's about half the outstanding mortgages in the United States.
The department, the Fed and other regulators worked in close consultation throughout the weekend after investor fears about the companies' finances sent their shares plummeting in trading last week. Paulson is working closely with congressional leaders to advance his plan as soon as possible as one complete package.
The announcement marked the latest move by the government to bolster confidence in the mortgage companies. A critical test of confidence will come Monday morning, when Freddie Mac is slated to auction a combined $3 billion in three- and six-month securities.
Fannie and Freddie were created by the government to provide more Americans the chance to own a home by adding to the available cash banks can loans customers.
A senior Treasury official said any increase in the line of credit — now at $2.25 billion for each company_ would be at the Treasury secretary's discretion. The same would apply to any equity investment made by the government.
The official, who spoke on condition of animosity, also sought to send a calming message about Fannie's and Freddie's financial shape, saying: "There's been no deterioration of the situation since Friday."
If one or both of the companies were to fail, it would wreak havoc on the already fragile financial system and the crippled housing market. The problems would spill over in the national economy, too.
Paulson on Friday said the government's focus was to support the pair "in their current form" without a takeover.
Hoping to bolster confidence, Senate Banking Committee Chairman Chris Dodd, D-Conn., told CNN on Sunday that Fannie and Freddie are financially sound.
"What's important here are facts," Dodd said. "And the facts are that Fannie and Freddie are in sound situation. They have more than adequate capital — in fact, more than the law requires. They have access to capital markets. They're in good shape. The chairman of the Federal Reserve has said as much. The secretary of the Treasury as said as much."
Last week Fed Chairman Ben Bernanke and Paulson, appearing before the House Financial Services Committee, made a point of saying that the regulator of Fannie and Freddie, the Office of Federal Housing Enterprise Oversight, has found both companies adequately capitalized.
The Federal Reserve said it granted the Federal Reserve Bank of New York authority to lend to the two companies "should such lending prove necessary." If the companies did borrow directly from the Fed, they would pay 2.25 percent — the same rate given to commercial banks and Big Wall Street firms.
Secretary Henry Paulson said the Treasury is seeking authority to expand its current line of credit to the two companies should they need to tap it and to make an equity investment in the companies — if needed. Such moves will require congressional approval.
"Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owner companies," Paulson said Sunday. "Their support for the housing market is particularly important as we work through the current housing correction."
The Treasury's plan also seek a "consultative role" for the Federal Reserve in any new regulatory framework eventually decided by Congress for Fannie and Freddie. The Fed's role would be to weigh in on setting capital requirements for the companies.
Fannie Mae and Freddie Mac either hold or back $5.3 trillion of mortgage debt. That's about half the outstanding mortgages in the United States.
The department, the Fed and other regulators worked in close consultation throughout the weekend after investor fears about the companies' finances sent their shares plummeting in trading last week. Paulson is working closely with congressional leaders to advance his plan as soon as possible as one complete package.
The announcement marked the latest move by the government to bolster confidence in the mortgage companies. A critical test of confidence will come Monday morning, when Freddie Mac is slated to auction a combined $3 billion in three- and six-month securities.
Fannie and Freddie were created by the government to provide more Americans the chance to own a home by adding to the available cash banks can loans customers.
A senior Treasury official said any increase in the line of credit — now at $2.25 billion for each company_ would be at the Treasury secretary's discretion. The same would apply to any equity investment made by the government.
The official, who spoke on condition of animosity, also sought to send a calming message about Fannie's and Freddie's financial shape, saying: "There's been no deterioration of the situation since Friday."
If one or both of the companies were to fail, it would wreak havoc on the already fragile financial system and the crippled housing market. The problems would spill over in the national economy, too.
Paulson on Friday said the government's focus was to support the pair "in their current form" without a takeover.
Hoping to bolster confidence, Senate Banking Committee Chairman Chris Dodd, D-Conn., told CNN on Sunday that Fannie and Freddie are financially sound.
"What's important here are facts," Dodd said. "And the facts are that Fannie and Freddie are in sound situation. They have more than adequate capital — in fact, more than the law requires. They have access to capital markets. They're in good shape. The chairman of the Federal Reserve has said as much. The secretary of the Treasury as said as much."
Last week Fed Chairman Ben Bernanke and Paulson, appearing before the House Financial Services Committee, made a point of saying that the regulator of Fannie and Freddie, the Office of Federal Housing Enterprise Oversight, has found both companies adequately capitalized.
Myrtle Beach Gay Pride day
Myrtle Beach Pride day was held Saturday at the Train Depot. It's an event with a controversial past. In fact, there hasn't been a Pride event in Myrtle Beach since 1998.
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