U.S. Economic/Financial News

December Foreclosures Top 100,000 for Fifth Month

For the fifth month in a row, foreclosures in December topped 100,000, it was reported Jan. 17. Some 109,652 homeowners nationwide entered into some stage of the foreclosure process in December, down 9% from November but up 35% compared with December 2005, according to RealtyTrac. This corresponds to a national foreclosure rate of one new foreclosure filing for every 1,055 households. The combination of slower home sales and rising interest rates on adjustable-rate mortgages (ARMs), especially subprime ARMs (to borrowers with poor credit histories), RealtyTrac said, continue to drive foreclosures at "significantly higher numbers than a year ago."

The three metropolitan areas with the highest foreclosure rates were Greeley, Colorado; Fort Worth, Texas; and Detroit, Michigan.

Number 3 Homebuilder to Scale Back by 20% This Year

The third-largest U.S. homebuilder announced it will cut construction by 20% in 2007. Lennar Corp. also reported its first quarterly loss in at least a decade Jan. 17—$195.6 million for the quarter ended Nov. 30, as it wrote down the value of its land holdings and options.

Oberstar Blasts Bush Transport Commission for Pushing PPPs

A Congressionally created, but Bush Administration-controlled commission, is mandated to study and recommend proposals to address the nation's transportation needs and how to fund them for the next 30-50 years. While Congress established it, Bush's Department of Transportation chairs it and determines the "experts" who will testify. Most of its "experts" have attempted to make a case for using public-private-partnership (PPP) funding for transportation projects in the future. Rep. James Oberstar (D-Minn), the new chair of the House Transportation and Infrastructure (T&I) committee, blew the cover on the commission's activities: "[It] seems to be moving in the direction of replacing the highway trust fund with public-private-partnerships," Oberstar said, Congressional Quarterly Today reported Jan. 18.

EIR's investigation into the commission not only found this to be true, but also learned found dissension among its commissioners on this point. Rep. Peter DeFazio (D-Ore), now chair of the T&I's Highways subcommittee, said the administration "merely wants to privatize existing infrastructure so that the private sector can make money on it." The much-touted Indiana toll road is presented as the model for states' infrastructure funding needs.

Rail Funding Bill Expected To Pass House and Senate

A bipartisan bill to fund national and state rail operations and projects, was introduced in the U.S. Senate Jan. 16 by Frank Lautenberg (D-N.J.) and Trent Lott (R-Miss), and will likely see swift passage in both houses of the 110th Congress. The newly introduced bill S. 294, the Passenger Rail Investment and Improvement Act of 2007, was introduced as a bipartisan initiative to re-authorize Amtrak and provide Federal grants for state rail corridor development. So far, there are 17 co-sponsors, five of whom are Republicans. In the 109th Congress, a nearly identical bill (S. 1516), known as the Lott-Lautenberg rail bill, was introduced and passed in the Senate. That bill died as the House failed to act on it.

At Jan. 16 press conference held in Union Station, Washington, D.C., Lott humorously alluded to the new control in Congress when he quipped, the bill "used to be Lott-Lautenberg. Now, it's Lautenberg-Lott. We never miss a step.... There are some things in Washington that are truly bipartisan, including transportation..."

Lautenberg, in his remarks introducing the bill on the Senate floor, situated the role and need for rail development: "One need only to look at Europe and Asia to see the benefits that a modern passenger rail system can bring.... Germany, which invested [$9 billion] in its rail system in 2003 alone, has a modern, high-speed rail system that reduces pollution, eases congestion, and improves mobility...." He called this initiative "the most comprehensive reauthorization of Amtrak ever attempted" by the U.S. Senate. He detailed that the bill provides $12 billion in Federal support, over six years, for Amtrak's operations ($3.3 billion), capital investments ($6.3 billion), and for its debt and interest payments ($2.4 billion). Another key provision to provide $7.8 billion in capital grants to States for development of rail corridors over six years was added as an amendment by Lautenberg-Lott upon filing the bill.

Importantly, the press spokesman for the new chair of the House Transportation and Infrastructure Committee, Rep. James Oberstar (D-Minn), indicated the potential for support in the House when he told the press, "Given the change in management and the new management's more favorable view of Amtrak, we expect it to get through the committee and to the floor."