New claims for unemployment falls to lowest level since April 2011

According to a story at CNN, initial claims for unemployment levels fell to their lowest level since April. From the story:

The number of Americans filing for their first week of unemployment benefits fell last week to the lowest level in nearly six months, possibly signaling slight improvement in the job market.

There were 391,000 initial unemployment claims filed in the week ended Sept. 24, the Labor Department said Thursday, down 37,000 from the prior week's revised 428,000.

The drop was much better than expected, as economists forecast initial claims to fall to 419,000, according to Briefing.com.

New claims for unemployment benefits have stuck around or above 400,000 since early April, a level economists often say is too high to signal the unemployment rate will come down anytime soon.

The recent drop to 391,000 maked the lowest level since the week of April 2, when 385,000 new claims came in.

Still, economists cautioned against getting too excited about the better number. It's just one week of data, and according to a government spokesman, seasonal adjustments could have impacted the calculation.

Click here for the CNN story.

Click here for the release from the U.S. Dept. of Labor.

Barack Obama on the economy

In case you missed it, President Obama's speech on the economy (and education) is below.

Some highlights from CNNMoney.com:

President Obama on Monday pushed his plans to make the nation's economy more stable in the future by investing in education for high-tech industries.

The president unveiled a new "innovation strategy" that builds on $100 billion of economic stimulus funds to support entrepreneurship, education, infrastructure and other investments.

The plan aims to make the U.S. economy more competitive and help prevent volatile "boom and bust" cycles in the future, Obama said...

Obama reiterated his call for increased investment in green energy technology, electronic health records and manufacturing advanced vehicles.

The president also pointed to proposed tax cuts and trade policies his administration has perused as ways to make U.S. companies more competitive and prosperous.

FDIC promoting mortgage help for the jobless

Given the high -- and increasing -- levels of unemployment throughout the U.S., the FDIC is encouraging those institutions buying failed banks and are sharing any losses with the agency to offer some breathing room to jobless borrowers at risk of foreclosure. While the idea will only impact a small number of borrowers, the idea could conceivably spread to other banks, thus limiting the damage from the one-two punch of toxic mortgage resets and unemployment. From CNNMoney.com:

Some unemployed homeowners at risk for foreclosure could get a temporary break on their mortgage payments under a plan being pushed by the FDIC.

The Federal Deposit Insurance Corp. said on Friday it is encouraging certain banks to reduce mortgage payments for the unemployed or underemployed for at least six months.

Overall, relatively few of the unemployed will benefit from this recommendation because the effort would only apply to a handful of institutions. Specifically, it would affect those that bought failed banks and participate in loss-share agreements with the FDIC. In such deals, the agency covers some of the losses incurred on the assets of the failed banks. Some 53 institutions, mainly regional or community banks, have entered into such arrangements since January 2008...

The expanding unemployment rolls have long vexed policymakers focused on stabilizing the housing market. Existing foreclosure-prevention programs, including the president's loan modification plan, generally do not help the jobless because they don't have enough income to sustain even reduced monthly payments...

Administration officials have said they are exploring ways to help the unemployed -- including through reduced payments, typically callled forbearance plans...

While many servicers have offered forbearance plans in the past, fewer are these days. That's because financial institutions no longer feel that borrowers will be able to land a comparable job within a few months...

Citigroup is one of the few banks that has implemented a plan to help the jobless during the housing crisis. The bank will lower the payments of eligible borrowers to an average of $500 a month for three months.

Under the FDIC's recommendation, unemployed or underemployed borrowers would have their payments reduced to an affordable level for at least six months...

Unlike a typical forbearance plan, where the arrears would have to be paid back within a year, the FDIC endorses allowing borrowers to catch up over the life of the loan.

Borrowers who cannot afford their payments once they get jobs would be considered for a loan modification program approved by the FDIC, which includes the president's plan. Eligible borrowers could have their monthly payments reduced to 31% of their pre-tax income if doing so would cost less than foreclosing on the home.

Fannie and Freddie reportedly in critical condition

Remember those wild childs Fannie Mae and Freddie Mac, taken over the federal government (i.e., all of us) last fall? Apparently they're still beset by multiple problems and are still not able to operate without government assistance. From a CNN story:

Fannie Mae and Freddie Mac, charged with helping lead the nation out of its housing crisis, are facing "critical" financial problems, federal regulators said Monday.

The companies suffer from severe financial, operational and compliance weaknesses, the Federal Housing Finance Agency said a report to Congress detailing its annual examinations of the firms. Taken over by the government in September, Fannie and Freddie are not able to operate without federal assistance.

"With new senior management teams, each enterprise has made strides in remediating problems," the agency said. "But they still face numerous significant challenges including building and retaining staff and correcting operational and credit management weaknesses that led to conservatorship."...

To continue functioning, the firms have drawn down about $60 billion of their combined $400 billion lifeline from the federal government. Fannie reported a $23.2 billion quarterly loss and Freddie a $9.9 billion quarterly loss earlier this month.

One hurdle to putting Fannie and Freddie back on firm financial footing is the many vacancies in their executive ranks. Hiring has been slowed by compensation concerns, the agency said.

While the housing meltdown prompted the companies' near collapse in 2008, this year will also be difficult. Fannie Mae will face challenges as it works with servicers to help troubled borrowers and to manage and sell a growing inventory of foreclosed properties, the agency said. Freddie Mac, meanwhile, needs to improve its internal controls and find a chief executive officer.