Geithner Urges More Mortgage Help

Three stories this morning illustrate just how much the financial fallout over the last year continues to dog the U.S. economy. The Wall Street Journal reports on the Obama administration's frustration with the pace at which mortgage companies are reworking troubled loans even though they were given incentives to do so by the government's housing rescue plan. While more than 270,000 borrowers have received modification offers, many borrowers still are "waiting for help as mortgage-servicing companies get up to speed. The administration has said its program could help as many as four million homeowners," writes the WSJ, which quotes a letter written to 25 leading mortgage companies by Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan that says: "We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share."

Talking of sharing, American International Group (AIG) is seeking permission from the Obama administration's federal compensation czar to pay a total of $2.4 million dollars in bonuses to dozens of its senior executives, including members of its disgraced financial-products unit, the New York Times reports. So far AIG has received $170 billion in bailouts from the U.S. taxpayer.

Any of those taxpayers residing in California and in receipt of state-issued registered warrants (IOUs to you and me) might want to cash them in, like, today. CNN Money reports that Wells Fargo (WFC) and Bank of America (BAC) have decided to stop accepting the 91,200 IOUs worth $354.4 million issued by State Controller John Chiang on July 2 to conserve cash while lawmakers and Gov. Arnold Schwarzenegger argue over closing a $26 billion budget gap. While many credit unions will continue to accept the warrants, the banks argue that the longer they agreed to honor the IOUs the longer the politicians will take to sort out California's fiscal mess.

Good news for the new General Motors (GM): Yesterday's court decision to reject a final legal challenge to the government takeover of GM clears the way for the automaker to emerge from bankruptcy protection as early as today, writes the BBC and WSJ. "Unprecedented, unbelievable, breathtaking ... [t]here's simply no precedent for the speed with which the government got this through court," one leading corporate-restructuring lawyer tells the WSJ. If the new GM is to succeed, much rests on the shoulders of its Chevrolet division, writes Business Week. Already it may have a hit on its hands in the shape of the new Camaro, a muscle-car throwback that "is winning over consumers looking for a little excitement in a bland landscape of look-alike sedans and watered-down sport utilities," writes the NYT. GM sold 9,300 Camaros last month: That's more than either its entire Buick or Cadillac divisions could muster on their own, notes the NYT.

Just as well, then, that the oil boom looks set to burst after crude prices dipped below $60 a barrel following two weeks of uninterrupted declines. It's an admission by traders and investors that "a global economic recovery would take longer than hoped," writes the NYT. Thursday's drop came on the back of Energy Department figures showing a substantial increase in gasoline inventories in the United States and signalling a retraction in U.S. demand for oil. Only something as serious as a Middle Eastern spat over drilling rights could reverse that trend: By coincidence, the NYT also reports that Iraq's Kurdish leaders are pushing ahead with a new constitution that "enshrines Kurdish claims to territories and the oil and gas beneath them." That puts them on a collision course with the Iraqi federal government, which recently started discussions with international oil companies over new drilling concessions.

Finally, Google Inc. (GOOG) Chief Executive Eric Schmidt is feeling pretty smug about his company's new, free Windows-killer operating system due to debut next year. Combining the OS with Google's Chrome browser is a "game changer," says Schmidt. Having been skeptical for many years about going after Windows, Schmidt now believes "Google can withstand whatever counter punches Microsoft might throw," writes Business Week.