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Home Buyers Tax Credit Extended

In an effort to jumpstart real estate prices, the Obama administration has extended a key tax credit for first-time home buyers and “move-up” home buyers. The HR 3548 also offers more help for unemployed individuals as well as people struggling with mortgage delinquency. The $8,000 tax break for first time homeowners will be valid until May 1, 2010. Meanwhile, “move-up” buyers need to sign the purchase agreement before May 1, 2010 and then close the deal before July 1 for the tax credit to be valid.

It should be noted that not everyone is eligible for the tax break. For example, individuals with adjusted gross incomes of above $125,000 a year and couples with over $225,000 a year cannot get this advantage. However, the new bill still provides a better deal compared to the previous one as the latter set the incomes at $75,000 and $150,000 respectively. This means that an additional segment of the market can get assistance. The following blogs provide more details about the extended tax credit:

Bob @ Broker for You uploaded an informative article titled “Move Up Home Buyers Tax Credit”. The content is particularly beneficial for individuals who are looking to buy a better home for themselves or their families. For example, it lets you know how long you should have stayed in your current home in order to be eligible for it as well as other details.

Alexis @ BV on Money wrote the blog post “6,500 Tax Credit for Home Buyers: Owners Have Good Reasons to Buy”. It talked about the main benefits of getting the tax break. Individuals who intend to buy a house in the near future should consider the credit because it is not everyday that a deal like this is available from the government.

Jeff @ Good Financial Cents has an interesting article. The “$8,000 First Home Buyer Tax Credit is Extended and $6,500 Credit Added” post provides basic insights about what you can expect from the recently passed bill. He also cited the effects this bill will have on individual households and the economy in general.

U.S. Unemployment – Stemming Job Losses without Second Stimulus

Faced with an increasing number of job cuts despite pumping trillions in the American economy, the Obama administration is considering a mixture of tax cuts and spending programs to stem job losses in the United States. It will entail an additional stimulus without carrying the stigma of a bailout.

Implementing these proposals is another matter because the White House needs to balance the concern about unemployment with the issue of the gaping budget deficit. It is estimated to be at $1.6 trillion for 2009 and $1.4 trillion in 2010. New programs are bound to be politically sensitive. In fact, Press Secretary Robert Gibbs clarified that there “were no plans” to pass a second stimulus similar to the $787 billion approved earlier this year.

Instead, the White House is merely looking into extending the programs that are already in place. He further added that the “economic team is certainly looking at and working on any way that we can create more jobs.” Among the measures discussed include boosting the transportation spending and extending the tax credit for first-time home buyers.

According to Chris Van Hollen “If there was to be another round of stimulus, additional infrastructure would be at the top of the list.” Investments in roads and bridges would be popular among Democrats. No matter what lawmakers and the White House decide to call these programs, financial experts think of it as economic stimulus. Dean Baker of the Center for Economic and Policy Research stated that these are stimulus spending and that “there’s no two ways about it.”

At this point, the Obama administration hasn’t made any final decisions yet. Jen Psaki, a spokesperson from the White House, said that they are still exploring the “best options”. Looking for the best solution is certainly a necessity in these troubled times especially with the health care bill being pushed in Congress.

Federal Reserve Bank’s Additional Powers – Weekly Round-Up

This past week, talks in Washington centered on regulating the financial industry. The Obama administration has proposed to give the Fed systematic powers in overseeing the banking sector as a whole. A lot of lawmakers are criticizing this plan, arguing that giving too much power to the Fed might be risky. There is currently limited disclosure about the Fed’s multibillion-dollar lending programs. If they weren’t transparent in the past, why would they change in the future? Another concern is the structure of the Federal Reserve itself. Regional branches are not classified as government agencies.

Meanwhile, other lawmakers cite that the Fed has a conflict of interest. If it tasked to conduct monetary policy then it might not be the best body to supervise banks. Senior Fed officials have argued, however, that the two tasks are actually complementary. Since the agency is involved in crisis stabilization, they need to have other roles in the financial system.

Whatever the case may be, ultimately, it is the public who has to pay for the decisions made on Capitol Hill. Bloggers from all over the country have expressed their opinions about these developments. Here is a list of blogs that talk about the Fed’s proposed systematic role, the criticisms of the system, and how it will affect ordinary Americans:

Paul Joseph @ Prison Planet wrote an insightful blog post entitled “Ron Paul Slams Federal Reserve’s New Dictatorial Powers“. Here, he provides a lot of quotes from Ron Paul and explains his argument. The criticism of Obama’s proposal is centered on giving the Fed additional authority. It might be too risky for the industry as a whole.

The Look at Vietnam blog provides updated information about the news in Capitol Hill. One article uploaded this week is titled “Geithner Says Federal Reserve Best Positioned for Super Regulatory Role“. It explained the position of the Treasury Secretary. He also said that the plan will only give the Fed a modest amount of additional powers.

Sudeep @ the Wall Street Blog wrote an in-depth blog post, “Financial Regulation: Congress Takes on the Federal Reserve“. It basically outlines the arguments lawmakers have over Obama’s proposed reform and the administrations answer to these concerns.

Fed Tasked to Oversee Systematic Risks in the Financial Industry

The Federal Reserve took a lot of flak from lawmakers when it failed in its oversight responsibilities and the financial crisis occurred. Now, it seems that the Obama administration is planning to remedy this situation by endowing the agency with the authority to oversee systematic risk. If this plan passes Congress, it will usher in the Fed’s biggest reform in decades. At the same time, the Federal Reserve’s emergency lending capabilities will be limited.

The proposed financial regulation will require the central bank to get written consent from the Treasury before it can give emergency bailout funds. In addition, Obama wants a comprehensive review on how the agency regulates financial companies. In essence, the move is a proposal that aims to prevent regulatory loopholes that result to risk build-up. However, a significant part of the plan requires the approval of Congress where ideological clashes will likely occur. Despite this, the president wants to sign the bill at the end of this year.

New Fed Oversight Responsibilities

Everything from mortgage lending practices to investment strategies will be affected in the government’s across-the-board effort to stop reckless decision-making that helped spark the economic crisis. According to Obama, “we have to have somebody who is responsible for seeing the risk of the system as whole and not just individual institutions.” He added that the “Fed is best positioned to do that”.

Essentially, the plan will overhaul the outdated financial system and make way for fundamental changes. Instead of using a “bulldozer” to clear the path to reforms, senior government officials likened the reforms as restructuring an existing system. It can be likened to an architect’s blueprint for improving an old structure.

Obama’s 85-page white paper outlines the reason why the economic crisis occurred and gave proposals on how these loopholes can be plugged. Among the most notable reasons include the yawning gaps in regulation that allowed banks to lend to borrowers that cannot afford it. Funding these loans can from exotic investments that regulators poorly understood. In addition, problems with executive compensation were also tackled.

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