US declares Zika public health emergency in Puerto Rico

CHICAGO - The Obama administration on Friday declared a public health emergency in the U.S. territory of Puerto Rico, saying the rapid and widespread transmission of the Zika virus threatens the health of infected pregnant women and their babies.

The Caribbean island of about 3.5 million people has recorded 10,690 laboratory-confirmed cases of Zika, including 1,035 pregnant women, but the actual number of infections with the mosquito-borne virus is likely higher, the U.S. Department of Health and Human Services said in a statement.

Among U.S. states and territories, Puerto Rico is expected to see the worst of the Zika outbreak due to its tropical climate and a lack of infrastructure for mosquito control. The only local transmission of the virus so far reported in the continental United States has been in South Florida.

The virus can cause microcephaly, a birth defect marked by abnormally small head size and developmental problems in babies. It also can also be spread by sex, prompting public health officials to advise that people who have been infected refrain from unprotected sex for several months.

"This administration is committed to meeting the Zika outbreak in Puerto Rico with the necessary urgency," HHS Secretary Sylvia Burwell said in a statement.

The public health emergency declaration is a tool for the federal government to provide fresh support to Puerto Rico's government to tackle the outbreak and grants access to certain federal funds.

The last time HHS declared such an emergency was in 2012 in the wake of Superstorm Sandy, which slammed into the New Jersey shore and flooded parts of New York City.

It was the second important step to fight Zika that the federal government has taken in as many days. The administration said on Thursday it had shifted $81 million in funds from other projects to continue work on developing vaccines to fight Zika in the absence of any funding from U.S. lawmakers.

REQUEST FROM THE GOVERNOR

HHS made the declaration at the request of Puerto Rico Governor Alejandro García Padilla. It allows Puerto Rico to apply for funding to hire and train unemployed workers to assist in mosquito control efforts, as well as for outreach and education efforts.

It also allows Puerto Rico to temporarily reassign public health workers to assist in the Zika response.

"The declaration will allow access to more funds, the waiving of certain regulatory procedures to speed response, reassign key personnel, allow temporary personnel appointments, and provide the authority to take necessary actions to combat the outbreak," said Dr. Amesh Adalja, an infectious disease expert and senior associate at the UPMC Center for Health Security in Baltimore.

Also on Friday, Florida said three more people had become infected with Zika by local mosquitoes, bringing the total to 28.

Zika was first detected last year in Brazil, where it has taken its heaviest toll so far, and has spread rapidly through Latin America and the Caribbean.

"The threat of Zika to future generations of Puerto Ricans is evident, and I feel a responsibility to do everything that is within my reach to make sure we fight the spread of the virus," Garcia Padilla said in a statement.

The Obama administration in February requested $1.9 billion to fight Zika, but the Republican-led Congress has approved no money.

A bill providing $1.1 billion was blocked by Democrats after Republicans attached language to stop abortion-provider Planned Parenthood from using that government funding for healthcare services, mainly in U.S. territories like Puerto Rico.

The Republican legislation also would siphon off unused money under Obama's signature 2010 healthcare law to combat Zika.

source: www.abs-cbnnews.com

US to issue decree on transgender access to school restrooms: NY Times

WASHINGTON - The Obama administration is planning to issue a sweeping decree telling every public school district in the country to allow transgender students to use the bathrooms that match their gender identity, the New York Times reported on Thursday.

The letter to school districts that will go out on Friday describing what they should do to ensure that none of their students are discriminated against is signed by officials of the Justice Department and Education Department, according to the Times.

It does not have the force of law but contains an implicit threat that schools which do not abide by the Obama administration's interpretation of the law could face lawsuits or a loss of federal aid, the newspaper said.

"No student should ever have to go through the experience of feeling unwelcome at school or on a college campus," Education Secretary John King Jr. said in a statement, according to the Times.

"We must ensure that our young people know that whoever they are or wherever they come from, they have the opportunity to get a great education in an environment free from discrimination, harassment and violence," he said.

The move comes as the Obama administration and North Carolina battle in federal court over a state law passed in March that limits public bathroom access for transgender people.

By passing the law, North Carolina became the first state in the country to ban people from using multiple occupancy restrooms or changing rooms in public buildings and schools that do not match the sex on their birth certificate. (Writing by Eric Beech; Editing by Sandra Maler)

source: www.abs-cbnnews.com

Obama's inversion curbs kill Pfizer's $160-B Allergan deal

NEW YORK - U.S. drug maker Pfizer Inc agreed on Tuesday to terminate its $160 billion agreement to acquire Botox maker Allergan Plc, in a major victory to U.S. President Barack Obama's drive to stop tax-dodging corporate mergers.

The decision to end the biggest tax "inversion" ever attempted, which would have seen Pfizer slash its tax bill by redomiciling to Ireland where Allergan is registered, came a day after the U.S. Treasury unveiled new rules to curb inversions.

While these new rules did not name Pfizer and Allergan, one of their provisions targeted a specific feature of their merger; Allergan's previous history as a major acquirer of other companies. The subsequent demise of the deal allows Obama to claim a big win during his last year in office.

Earlier on Tuesday, Obama called global tax avoidance a "huge problem" and urged Congress to take action to stop U.S. companies from tax-avoiding corporate "inversions", which lower companies tax bills by redomiciling overseas.

"While the Treasury Department's actions will make it more difficult... to exploit this particular corporate inversions loophole, only Congress can close it for good," Obama said.

Pfizer and Allergan will announce the termination of their deal on Wednesday, a source familiar with the matter said, asking not to be identified ahead of any official statement. Pfizer and Allergan declined to comment.

Pfizer was concerned that any tweaks to salvage the inversion might have provoked new rules by the U.S. Treasury, and so was leaning earlier on Tuesday to end the deal, a source had earlier told Reuters.

Pfizer will have to pay Allergan up to $400 million for its expenses as a result of terminating the deal, according to their merger agreement.

Pfizer shares had ended trading in New York on Tuesday up 2 percent on hopes the company would walk away or renegotiate the deal in its favor. Allergan shares closed down 14.8 percent to their lowest level since October 2014.

Several U.S. presidential candidates, including Republican Donald Trump and Democrats Hillary Clinton and Bernie Sanders, have seized on the issue in their campaigns.

"We have so many companies leaving, it is disgraceful," Trump told reporters as he greeted voters in Waukesha, Wisconsin on Tuesday. Clinton and Sanders both expressed support for Treasury's plan.

Besides Pfizer-Allergan, other pending inversion deals that have not yet closed include the proposed $16.5 billion merger of Johnson Controls Inc with Ireland-based Tyco International Plc, Waste Connections Inc's $2.67 billion deal with Canada's Progressive Waste Solutions Ltd, and IHS Inc's $13 billion acquisition of London-based Markit Ltd.

In all these cases, the shares of the target companies fell only slightly. Johnson Controls and Tyco said they would respond after conducting a review of the new rules.

Waste Connections and Progressive Waste Solutions said they expected the rules would impact less than 3 percent of the combined adjusted free cash flow in their first year after the deal.

IHS and Markit said they believed the rules would not affect their adjusted effective tax rate guidance of a low to mid-twenties percentage range.

THREE-YEAR RULE

Under previous rules which still apply, Allergan shareholders needed to own at least 40 percent of the combined company for the two companies to enjoy the full tax benefits of an inversion, and more than 20 percent to have any inversion benefit at all.

But a new 'three-year-look-back rule' issued by the Treasury on Monday made this much harder for Allergan, and appeared to take aim directly at it because of how the company was put together.

The new rule does not allow stock accumulated through a foreign company's U.S. deals in the last three years to count towards the book value needed to meet the inversion threshold.

This weighed on Allergan heavily because of its significant deals in this timeframe. These include the $66 billion merger of Allergan and Actavis Plc, the $25 billion purchase of Forest Laboratories and the $5 billion takeover of Warner Chilcott.

"The serial acquisition portion of the regulations will cause Pfizer to be treated as an 'expatriated entity' (under the terms of its existing deal with Allergan)," Robert Willens, a corporate tax and accounting analyst, wrote in a note.

SHEDDING GENERICS

In a second change to the rules, the Treasury also said it would seek to limit a practice known as earnings stripping that is often undertaken following, but not limited to, an inversion. The new Treasury rules would restrict related-party debt for U.S. subsidiaries in dealings that do not finance new investment in the United States.

Without Allergan's new, fast-growing medicines, Pfizer may need to look for other companies with attractive products, such as U.S. drugmakers Biogen Inc, Regeneron Pharmaceuticals Inc and AbbVie Inc, said Raghuram Selvaraju, managing director of brokerage H.C. Wainwright.

Pfizer had planned to make a decision by 2016 whether to split off its hundreds of generic medicines, but delayed the decision until 2019 after announcing its merger with Allergan. Morningstar analyst Damien Conover had said the decision could be moved to late 2017 or 2018 if the deal with Allergan collapsed.

Pfizer, which announced the deal in November, had said its tax rate would drop to about 17 or 18 percent after the deal, from around 25 percent. That would have represented more than $1 billion in annual cost savings.

The deal's collapse is also a blow to the investment banks involved. Guggenheim Partners LLC, Goldman Sachs Group Inc, Centerview Partners Holdings LLC and Moelis & Co stood to share $94 million in fees advising Pfizer had the deal closed, while Allergan would have paid its advisors, JPMorgan Chase & Co and Morgan Stanley, $142 million in total, according to the latest estimates by Freeman & Co LLC.

Bankers may now get paid only 10 percent of these amounts, according to Freeman.

This is not the first time a tightening of the U.S. inversion rules have caused a merger to unravel. U.S. pharmaceutical company AbbVie abandoned its $55 billion takeover of Ireland-domiciled peer Shire Plc after the Obama administration cracked down on inversions in 2014. AbbVie had to pay Shire a $1.6 billion break-up fee.

source: www.abs-cbnnews.com

Apple likely to invoke free-speech rights in encryption fight

NEW YORK/SAN FRANCISCO - Apple Inc. will likely seek to invoke the United States' protections of free speech as one of its key legal arguments in trying to block an order to help unlock the encrypted iPhone of one of the San Bernardino shooters, lawyers with expertise in the subject said this week.

The tech giant and the Obama administration are on track for a major collision over computer security and encryption after a federal magistrate judge in Los Angeles handed down an order on Tuesday requiring Apple to provide specific software and technical assistance to investigators.

Apple Chief Executive Officer Tim Cook called the request from the Federal Bureau of Investigation unprecedented. Other tech giants such as Facebook Inc., Twitter Inc. and Alphabet Inc.'s Google have rallied to support Apple.

Apple has retained two prominent, free-speech lawyers to do battle with the government, according to court papers: Theodore Olson, who won the political-speech case Citizens United v. Federal Election Commission in 2010, and Theodore Boutrous, who frequently represents media organizations.

Government lawyers from the U.S. Justice Department have defended their request in court papers by citing various authorities, such as a 1977 U.S. Supreme Court ruling that upheld an order compelling a telephone company to provide assistance with setting up a device to record telephone numbers.

The high court said then that the All Writs Act, a law from 1789, authorized the order, and the scope of that ruling is expected to be a main target of Apple when it files a response in court by early next week.

But Apple will likely also broaden its challenge to include the First Amendment's guarantee of speech rights, according to lawyers who are not involved in the dispute but who are following it.

Compared with other countries, the United States has a strong guarantee of speech rights even for corporations, and at least one court has ruled that computer code is a form of speech, although that ruling was later voided.

Apple could argue that being required to create and provide specific computer code amounts to unlawful compelled speech, said Riana Pfefferkorn, a cryptography fellow at Stanford University's Center for Internet and Society.

The order against Apple is novel because it compels the company to create a new forensic tool to use, not just turn over information in Apple's possession, Pfefferkorn said. "I think there is a significant First Amendment concern," she said.

A spokesman for the U.S. Attorney's Office in Los Angeles declined to comment on the possible free-speech questions on Thursday.

A speech-rights argument from Apple, though, could be met with skepticism by the courts because computer code has become ubiquitous and underpins much of the U.S. economy.

"That is an argument of enormous breadth," said Stuart Benjamin, a Duke University law professor who writes about the First Amendment. He said Apple would need to show that the computer code conveyed a "substantive message."

In a case brought by a mathematician against U.S. export controls, a three-judge panel of the 9th U.S. Circuit Court of Appeals, which covers California, found in 1999 that the source code behind encryption software is protected speech. The opinion was later withdrawn so the full court could rehear the case, but that rehearing was canceled and the appeal declared moot after the government revised its export controls.

The FBI and prosecutors are seeking Apple's assistance to read the data on an iPhone 5C that had been used by Rizwan Farook, who along with his wife, Tashfeen Malik, carried out the San Bernardino shootings that killed 14 people and wounded 22 others at a holiday party.

U.S. prosecutors were smart to pick the mass shooting as a test case for an encryption fight with tech companies, said Michael Froomkin, a University of Miami law professor. That is because the shooting had a large emotional impact while also demonstrating the danger posed by armed militants, he said.

In addition, the iPhone in dispute was owned not by Farook but by his employer, a local government, which has consented to the search of the iPhone. The federal magistrate who issued the order, Sheri Pym, is also a former federal prosecutor.

"This is one of the worst set of facts possible for Apple. That's why the government picked this case," Froomkin said.

Froomkin added, though, that the fight was enormously important for the company because of the possibility that a new forensic tool could be easily used on other phones and the damage that could be done to Apple's global brand if it cannot withstand government demands on privacy. "All these demands make their phones less attractive to users," he said.

source: www.abs-cbnnews.com

Canada's Trudeau meets Obama for first time, insists will withdraw jets

MANILA - New Canadian Prime Minister Justin Trudeau held his first formal meeting with U.S. President Barack Obama on Thursday as the two men tried to repair relations that have become frayed over the last decade.

"I'm confident that he's going to be able to provide a great boost of energy and reform to the Canadian political landscape," Obama told reporters after the two talked on the margins of an Asia-Pacific summit.

In last month's election, Trudeau's Liberals defeated Stephen Harper, who had irritated the Obama administration by insisting it approve the Keystone XL pipeline that would have taken tar sands oil from Canada to U.S. refineries.

Obama - whose ties with Harper were usually frosty - said he hoped Trudeau would be able to visit him in the White House early next year for more substantial talks.

"It's going to be a wonderful time of strengthening ties between our two countries," said Trudeau, who is much closer politically to Obama than the right-of-center Harper.

The two leaders, who smiled and looked relaxed during their appearance, said they agreed on the need to do more to protect the environment and also on the importance of the U.S.-led campaign against Islamic State.

Trudeau though vowed to stick to a promise to withdraw six Canadian jets that have been attacking the militants in Iraq and Syria.

Diplomats say the United States and Britain have expressed concern about the proposed withdrawal, saying it could undermine the coalition.

Trudeau added he had reassured the president that Canada was committed to the U.S.-led campaign against the militants. Canada, he says, could contribute more effectively by training Kurdish troops in northern Iraq.

Neither man mentioned Harper, who during his nine years in power said as little as he could about the environment and pulled Canada out of the Kyoto Protocol on climate change.

This did little to endear him to Obama, who vetoed Keystone XL earlier this month, saying it would send the wrong signal at a time when the world needed to do more to combat greenhouse gas emissions.

Trudeau said that over the last decade many people felt Canada had not being doing enough on the environmental front.

"One of the first tasks that I have on energy and climate issues is to reassure Canadians and others that we are serious about meeting reduction targets (and) being positive actors on the world stage in the fight against climate change," he said.

(Reporting by Matt Spetalnick; Editing by David Ljunggren and Raju Gopalakrishnan)

source: www.abs-cbnnews.com

What would it take to free US oil exports?

WASHINGTON - Lawmakers pushing to repeal the 1970s-era ban on U.S. oil exports face a steep obstacle: The Obama administration sees no need to fully remove the restriction while the country is still importing part of its oil supply.

And many politicians are wary of a voter backlash if gasoline prices go up just as they open the door to exports.

However, Senator Lisa Murkowski, the Republican head of her chamber's energy committee, is expected to introduce a bill as soon as Tuesday night that would lift the ban Congress passed in 1975 after the Arab oil embargo created fears of global shortages.

While there is plenty of resistance in Congress against lifting the ban, the prospects for a reversal could improve under some of the following conditions:

THE US OIL PRICE DROPS FURTHER

Mainly because of the U.S. oil glut, domestic crude producers now get about $6 a barrel less than companies in many other countries. If the glut grows and deepens the discount of West Texas Intermediate futures in New York to London's Brent oil futures by between $10 and $15 a barrel or more, it would create a dislocation politicians would find hard to ignore.

"I am not sure that policy makers will act in advance of that problem developing," said Jason Bordoff, a former energy advisor to President Barack Obama, now a founding director at Columbia University's Center on Global Energy Policy.

"In response to that kind of market dislocation, people will feel very pressured to act."

A RELATED HOUSE BILL PICKS UP STEAM

A bill introduced in February by Representative Joe Barton, a Texas Republican, has slowly gained backing and now has 26 co-sponsors in the 435 member chamber, including four Democrats. It could see a surge in support if more Representatives from non-energy producing states sign on.

One lawmaker to watch is Michigan's Fred Upton, the chairman of the energy committee in the House. He is open to moving legislation on crude exports "when the time is ripe and it has the bipartisan support to succeed," his spokeswoman said on Tuesday.

In the Senate, Murkowski's efforts got a boost last month when Senator John McCain, a Republican from Arizona, which is not a big oil producer, declared support for lifting the ban. Murkowski still needs five Democrats in addition to North Dakota Senator Heidi Heitkamp, who supports the bill, to get the 60 votes likely required.

CONSUMER GROUPS GET ON BOARD
A string of reports from think tanks have concluded that allowing U.S. oil exports would cut the cost of gasoline because it would lower the price of Brent on which those prices are based.

If a major shipping company, or industry groups representing airlines or cruise ships, come out in favor of lifting the ban, it could sway policymakers into joining the fight.

OBAMA APPROVES EXPORTS TO MEXICO

The administration is expected to allow a swap of crude oil to Mexico, giving the country the same right to import U.S. oil as Canada. The move - a test drive for lifting the entire ban - could make politicians comfortable with the idea that exports will not harm profits at refineries or cause a spike in gas pump prices.

A GEOPOLITICAL CRISIS

A foreign policy crisis involving a large oil producer could push Washington into allowing more American crude to reach global markets to tame any price rises. Bob McNally, president of energy consultancy the Rapidan Group, said the crisis scenario is the most likely way the ban would be lifted before a new president takes office.

Otherwise, said McNally, the route to lifting the ban will depend on electing a president in 2016 who supports oil exports and will encourage Congress to do so.

Columbia's Bordoff said a crisis could lend support, but steady pressure on Washington from Asia and Europe to relax the ban, even if there is no crisis, could also play a role.

source: www.abs-cbnnews.com

White House Security Council staffer axed for spewing snark and secrets in parody Twitter account

Senior White House official Jofi Jospeh has been fired for leaking internal information using the anonymous Twitter account, @NatSecWonk.

Turns out that a tweeter spouting sarcasm and snark at the Obama administration was actually a member of the ranks.

A National Security Council director, Jofi Joseph, has been fired from his plum White House gig after the administration found out he has been running @NatSecWonk, a Twitter profile that mocked D.C. insiders and even leaked vital security information.

He is reportedly under investigation by the Department of Justice for leaking sensitive information in his social media stunt, according to Foreign Policy's blog Situation Report.



Since February 2011, Joseph has used the social media moniker to poke fun of administration colleagues, mock the media, and at times launch embittered personal attacks against political friends and foes — priding himself in his Twitter bio on saying what "everyone else only thinks…I'm abrasive and bring the snark."

Now that Joseph's identity has been revealed, it's fair to say Joseph has pretty much burned bridges with everyone in Washington.

He called the President's most trusted adviser Valerie Jarrett a "vacuous cipher" and chided Obama loyalists he deemed hangers on.



"Growing problem for the Administration — too many 1st term holdovers not getting the hint that it's time to move on and get the f-ck out,” he noted.

He joked that Hillary Clinton's longtime aide Huma Abedin, a devout Muslim who doesn't drink, must have been "wearing beer goggles the night she met Anthony Wiener."

He slammed conservative pundit Sarah Palin and her "white trash family," calling them "useless garbage."



And in a shocking tirade against former Bush press spokesman Ari Fleischer, spewed nastiness against the Republican, mocking him for marrying "a woman a decade younger than him — and she's as ugly as he is! #jackass."

Fleischer married Rebecca Elizabeth Davis, an Office of Management and Budget staffer, in 2002. He was 42 at the time of the marriage, she was 26.

Joseph is also believed to be behind the Twitter profile @DCHobbyist.

Yes, it's fair to say that Joseph, 40, and his wife Carolyn Leddy, a staff member for the Senate Foreign Relations Committee and former fellow at the Council on Foreign Relations, might now find it incredibly difficult to mingle in D.C. circles.



In addition to committing social suicide in the Beltway, Joseph, who was director of nuclear nonproliferation on the White House National Security Council staff, also leaked sensitive information relating to his work negotiating with Iran on their nuclear program.

Though journalists appreciated the insider-y information, the account was reviled for going to painstaking efforts to correct typos in stories, correcting mocking story angles (based on confidential information he gleaned thanks to his security clearance) and dishing out his personal disdain for media starlets.

"Me thinks @peggynoonannyc and @chrismatthews should get together and swap stories, share some drinks and discuss why they are irrelevant," he tweeted on one occasion, in regards to the conservative WSJ columnist and MSNBC host.


In yet another disgusting jab, he took aim at conservative Washington Post blogger Jennifer Rubin, writing, "I feel sorry for the husband of @jrubinblogger He has to have sex with her every five years."

Though a keen grammar expert and stickler for details, Joseph had no qualms disregarding the social media policy of his employer — which has landed him without a job.

The White House revealed it had terminated Joseph last week and the former official came clean about his Twitter alter ego. The Twitter account has been shut down.

Calling it a "privilege" to serve the President, Joseph says he now regrets "violating the trust and confidence placed in me," according to a mea culpa statement released to Politico.

"What started out as an intended parody account of D.C. culture developed over time into a series of inappropriate and mean-spirited comments. I bear complete responsibility for this affair and I sincerely apologize to everyone I insulted."

White House bosses put two and two together and identified the owner of the Twitter handle after an extensive probe, according to Politico.

Given Obama has a little outfit called the National Security Agency at his disposal, it was really only a matter of time.

Officials also say they believe Joseph could be behind another Twitter handle, @dchobbyist, which includes illicit postings about State Department staffers.

source: nydailynews.com

Obama administration urges US Justices to overturn anti-gay marriage law

WASHINGTON - The Obama administration outlined its argument on Friday why the U.S. Supreme Court should strike down a federal law that defines marriage as between a man and woman.

Solicitor General Donald Verrilli filed a brief with the court saying that section 3 of the Defense of Marriage Act was unconstitutional, expanding on the administration's approach to the controversial 1996 law, which it has formally opposed since February 2011.

Section 3 defines marriage under federal law as being between a man and a woman.

The law denies federal benefits to same-sex married couples that are granted to married heterosexuals.

The administration's position is that the law violates the guarantee of equal protection under the law.

In the brief, Verrilli said there was a history of discrimination against gays and lesbians that required the Supreme Court to take a careful look at any law that specifically targets them as a group.

He therefore urged the court to take an approach to analyzing the law known as "heightened scrutiny," which, if adopted by the court, could make it more likely the court would find the law unconstitutional.

"The law denies to tens of thousands of same-sex couples who are legally married under state law an array of important federal benefits that are available to legally married opposite sex couples," he wrote.

The Supreme Court is set to hear arguments in the case on March 27, the day after it weighs the constitutionality of a California law, Proposition 8, which banned gay marriage in that state.

The administration has until Thursday to decide whether to weigh in on Proposition 8.

source: abs-cbnnews.com

GOP whip says Obama wants more spending

A top House Republican insisted the Obama administration's goal in the fiscal cliff talks was to get more money for spending rather than deficit reduction.

Republican Whip Kevin McCarthy, R-Calif., contended the White House's insistence on higher taxes for wealthy Americans was accompanied by plans to actually increase government spending at a time when major cuts were vital.

"We have spent all this time talking about revenue, but as we watched, our government continued to spend more," McCarthy said Sunday on NBC's "Meet the Press." "This is really about spending."

McCarthy accused Obama of ignoring constructive ideas from the Republicans and banking on post-election campaigning in order to build public support for his approach.

Sen. Dick Durbin, D-Ill., countered the Democrats had already agreed to significant spending cuts, and said U.S. voters indeed agreed with the president's approach, particularly in terms of taxes for upper-income Americans. "The American people spoke on this issue in the election. I'd say to House Speaker (John) Boehner and Congressman McCarthy, listen to what the American people said in the election."

source: upi.com

Fannie and Freddie won't lower mortgage principal, regulator says

WASHINGTON — After a lengthy review, a key federal regulator said Tuesday he would not allow Fannie Mae and Freddie Mac to lower the amount some underwater homeowners owe on their mortgages despite new financial incentives from the Obama administration.

Detailed analysis has determined that principal reductions would cost taxpayers money and would not clearly improve the ability of homeowners to avoid foreclosure, said Edward DeMarco, acting director of the Federal Housing Finance Agency. The agency oversees Fannie Mae and Freddie Mac, the housing finance giants that were seized by the government in 2008 as they teetered on the brink of failure.

The Obama administration, Democratic officials and housing advocates have been pressuring DeMarco to allow Fannie and Freddie to lower the principal for underwater homeowners as a way of reducing foreclosures. Fannie and Freddie own or back about 60% of all mortgages. Some, including California Atty. Gen. Kamala Harris, have called for Obama to fire DeMarco because of his refusal to allow Fannie and Freddie to reduce principal.

But DeMarco has steadfastly refused out of concern that it would increase the cost of the taxpayer bailouts of Fannie and Freddie. As of June 20, taxpayers have pumped $188 billion into the two companies to keep them afloat. The companies have paid about $46 billion in dividends back to the Treasury Department in exchange for that assistance, leaving taxpayers on the hook for about $142 billion.

The FHFA has been reconsidering the position because of new Treasury incentives tripling the amount of money offered to owners of mortgages to do principal reductions.

But DeMarco said those incentives were still taxpayer money and did not offset the potential harm from a principal reduction program. He said such a program could encourage underwater homeowners who are making their payments to stop so they could qualify for a principal reduction. The FHFA analysis found that it would take just 3,000 to 19,000 borrowers out of 1.4 million underwater borrowers to offset any potential positives to the bottom-line of Fannie and Freddie from principal reductions.

“We weighed these potential benefits and costs, recognizing the inherent uncertainties associated with these estimates … and we concluded that the potential benefit was too small and uncertain relative to known and unknown costs and risks to warrant Fannie and Freddie” offering principal reductions, DeMarco told reporters.

He stressed that Fannie and Freddie offer an array of programs to help struggling homeowners, including those that lower monthly payments.

Treasury Secretary Timothy F. Geithner wrote to DeMarco on Tuesday asking him to reconsider his position.

“Five years into the housing crisis, millions of homeowners are still struggling to stay in their homes and the legacy of the crisis continues to weigh on the market,” Geithner said. “You have the power to help more struggling homeowners and help heal the remaining damage from the housing crisis.”

[For the Record, 1:30 p.m. July 31: An earlier version of this post stated that taxpayers were on the hook for $42 billion in the bailout of Fannie Mae and Freddie Mac. The actual figure is $142 billion.]

source: latimes.com

Marine who criticized Obama will be dismissed from the service

The sergeant, a nine-year veteran who served in Iraq, will be demoted to lance corporal and receive an other-than-honorable discharge. He posted his critical comments on Facebook.


SAN DIEGO — A Marine sergeant who criticized President Obama on Facebook was notified Wednesday that he is being dismissed from the service with an other-than-honorable discharge.

Gary Stein, 26, a nine-year veteran who served in Iraq, will be demoted to lance corporal, and his discharge status will make him ineligible for most federal veterans benefits, after Brig. Gen. Daniel Yoo accepted the unanimous recommendation of an Administrative Separation Board.

The panel found that he made disparaging comments about Obama that were detrimental to good order and discipline and violated military law.

Civilian lawyers for Stein said they would continue to fight in federal court to prevent Stein from being dismissed or to win his reinstatement. The administrative paperwork for Stein's dismissal should take a week or more, Marine officials said.

Lawyers from the American Civil Liberties Union and the conservative U.S. Justice Foundation said Stein's 1st Amendment rights were being violated by the Marine Corps.

"I don't believe Sgt. Stein did anything other than engage in political speech," said the ACLU's David Loy . "Since the days of Valley Forge, I seriously doubt that there haven't been members of the armed forces who haven't complained about their government."

Gary Kreep of the U.S. Justice Foundation said he believes Stein was targeted by the Obama administration.

After the announcement of Yoo's decision, Stein put a post on his Facebook page thanking his family and friends for their support.

"Even though I will be discharged no one can take the title of Marine away from me," the post said. "...Today is just the start of the rest of my life. Semper Fi."

On Facebook postings, Stein had called Obama a coward and an enemy, vowed not to salute him, declared he would not follow orders from Obama that he considered illegal, and urged the president's electoral defeat.

One of the websites was an Armed Forces Tea Party page on Facebook created by Stein, who sought to sell bumper stickers printed with "NOBAMA 2012."

Stein, a weather forecaster, recently lost his security clearance and was working as a scheduler on the rifle range at Camp Pendleton.

A Marine spokesman said Yoo, commanding general of Marine Corps Recruit Depot San Diego, "found the [separation] board was conducted in accordance with law and regulation, the findings of misconduct were supported by the evidence of record, and thus approved the board's recommendation."

Stein's current enlistment would have ended in late July. He had hoped to reenlist.

source: latimes.com