Employment Cooling, Housing Slipping as Fed Continues to Combat Inflation

The nation’s red hot labor market cooled a bit in August, indicating that the Federal Reserve’s inflation-fighting efforts may be having the desired effect. But Fed officials aren’t declaring victory yet. Far from it.

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Slam, pan, bemoan, disappoint. Praise was nowhere to be found in the headlines reporting reactions to the much-anticipated bank bail-out plan Treasury Secretary Timothy Geithner announced two weeks ago. 

Legislation allowing bankruptcy judges to modify the terms of home mortgages, introduced, as expected, in the early days of the new Congressional session, received an unexpected boost when Citicorp broke ranks with the banking industry and withdrew its opposition to the measure.

With the blueprint for resuscitating the banking industry, for better or worse, now in place, President Barack Obama has turned his attention to the housing market, announcing a $275 billion government effort to help as many as 9 million homeowners at risk of losing their homes.

Financial industry lobbyists fighting (not very successfully thus far) to block mortgage cram-down authority for bankruptcy judges will not be pleased with this news.