Obama's Financial Clampdown

Obama's first week in office continues to spur the leading stories in the New York Times and the Washington Post, which paints a picture of what to expect in the coming week as Congress takes up the president's stimulus bill. The WP outlines major benchmarks of Obama's plan and takes readers through a four-page report released yesterday by the White House that details "spending priorities and accountability measures for the recovery package." According to the paper, "Obama wants to double renewable energy capacity within three years, creating enough additional capacity to power 6 million homes, and he plans to leverage $100 billion to finance private-sector clean-energy initiatives."

The Times focuses on imminent changes to the financial industry, including "stricter federal rules for hedge funds, credit rating agencies and mortgage brokers, and greater oversight of the complex financial instruments that contributed to the economic crisis." The analysis is gleaned from interviews, confirmation hearings, and a report by an international committee led by Paul Volcker, a senior member of President Obama's economic team. "Some of these actions will require legislation, while others should be achievable through regulations adopted by several federal agencies," the Times writes.

All of this comes as the Commerce Department, the Conference Board, and the University of Michigan, in conjunction with Reuters, are expected to find in upcoming reports that the credit crisis "sent the U.S. economy into a tailspin at the end of 2008 as consumers and businesses retrenched," Bloomberg says. "Consumer spending, the largest part of the economy, is forecast to have dropped at a 3.5 percent pace last quarter after slumping at a 3.8 percent rate the previous three months." If these figures are accurate, "it would be the first time purchases declined more than 3 percent in consecutive quarters since records began in 1947." The reports will be released this week.

Chrysler, one of the companies most affected by slowed consumer spending, gets a scrub-down by the Detroit Free Press, which writes that the automaker has strayed from "Project Genesis" to focus on "maintaining whatever retail sales volume it can as the industry struggles with crippling sales declines." Project Genesis, announced one year ago, aimed to "encourage greater dealer consolidation among the company's Chrysler, Dodge and Jeep stores and renew emphasis on getting the automaker's three brands sold at single locations." Weakening sales, however, have put the plan on the backburner as more pressing matters, like avoiding bankruptcy, take center stage, the paper writes. Chrysler is currently operating with a $4 billion federal loan.

Finally, the WP reports that an increasing amount of workers this year will pay more for health care benefits while, in many cases, receiving less coverage, "as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits," according to a recent survey of human-resource officials conducted by the Corporate Executive Board. The survey found that "a quarter of officials from 350 large corporations said they had increased deductibles an average of 9 percent in 2008. But 30 percent of the employers said they expected to raise deductibles an average of 14 percent in 2009." Separately, Mercer surveyed nearly 2,000 large corporations "and found that 44 percent planned to increase employee-paid portion of premiums in 2009, compared with 40 percent in 2008."