Rep. Jim McDermott (D-Wash.) (WDCpix)

To hear the Democrats tell the tale, the extension of jobless benefits enacted over the weekend will provide those living in high-unemployment states with an additional 20 weeks of insurance.

Well, not quite.

Because the bill was held up for so long in the Senate, an end-of-the-year filing deadline will prevent anyone from accessing the final six weeks of benefits, according to state officials and sources on Capitol Hill.

On Friday, President Obama signed into law legislation extending jobless benefits by 14 weeks nationwide, with an additional six weeks for those states where unemployment rates top 8.5 percent. Those benefits kicked in on Sunday. But there’s a glitch. The new law treats the 20-week extension as two separate extensions of 14 weeks and six weeks, with participants required to exhaust the first 14 weeks before applying for the next six. However, the current law keeps a Dec. 31 application deadline, roughly seven weeks from now, making collecting the full 20 weeks impossible.

Image by: Matt Mahurin

As a result, some members of Congress are already eying another sweeping unemployment extension, which would both address the deadline glitch and provide additional help — well beyond the six weeks in question — to those unable to find work next year, when jobless rates are expected to hover near double digits.

The Orange County Register first reported on the deadline glitch last week.

In a state like California, where unemployment currently stands above 12 percent, that technicality would prove significant. Loree Levy, spokesperson for California’s Employment Development Department, said Monday that an estimated 92,000 residents had exhausted all of their available unemployment by the end of October, and roughly 285,000 will be eligible for the newly enacted benefits by the end of the year. Whether they can get 20 weeks or only 14, though, depends on whether Congress extends the filing deadline.

Some in Congress are well aware of the problem. The office of Rep. Jim McDermott (D-Wash.) said Monday that he’ll be pushing a proposal to provide as much as an additional year’s worth of jobless benefits. The proposal will be wrapped into a package to include other provisions designed to ease Main Street’s pain amid the downturn, including money to subsidize COBRA health benefits, as well as a provision to extend the full federal funding of a traditionally state-federal unemployment insurance program called FedEd, which got full federal funding under the stimulus bill. Without congressional action, states would again have to pick up part of the FedEd tab at the end of 2009.

McDermott doesn’t have an easy task. The pricetag for extending just the unemployment benefits for one year is roughly $80 billion, the McDermott aide said. With deficit spending having topped $1 trillion in the last fiscal year — and with an enormous health reform proposal in the works — the congressional appetite for expensive new proposals is hardly ravenous. Still, with national unemployment at 10.2 percent — and no wave of new jobs on the horizon — even the most ardent small-government conservatives would have a tough time voting against additional relief.

Update: The office of Senate Majority Leader Harry Reid (D-Nev.) confirms that Congress must pass another bill to guarantee the full 20-week extension.

The United States economy shed 190,000 jobs in October, and the unemployment rate reached a 26-year high of 10.2 percent, up from 9.8 percent in September, the Department of Labor said Friday in its monthly economic appraisal.

While the pace of the job losses has slowed significantly since the peak of the recession last winter, the unemployment rate, which measures the number of people actively seeking work, continues to climb, and economists do not foresee relief until well into next year.

“There’s no doubt that the slashing and burning of jobs has abated quite a lot,” said Allen L. Sinai, the founder of Decision Economics, a research firm. “The economy is recovering, but it is a very soft recovery.”

The agency also revised September’s losses to 219,000 from 263,000.

Not surprisingly, Republican National Committee Chairman Michael Steele was quick to pounce with this statement:

“Since President Obama’s inauguration, the nation has watched the unemployment rate continue to climb, and unfortunately the month of October was no different.  More than 190,000 Americans lost their jobs in the month of October and the national unemployment rate increased yet again to 10.2 percent.  With so many families looking for work, it is time the Obama administration stop spreading their phony ‘saved or created’ talking points and start creating the dependable jobs America needs.  President Obama promised jobs during his campaign for president, and the elections in Virginia and New Jersey on Tuesday were a clear referendum on his failure to deliver on this promise.”

What’s striking about this is that the numbers have only marginally gotten worse for President Obama in the three months since Fox News last asked this question. In July, it was 16 percent who blamed Obama and 61 percent who blamed Bush. That is, needless to say, not what Fox News viewers hear when they tune into the network. But it’s essential to understanding why the president remains popular and why Republicans are failing to really capitalize on economic gloom.

Treasury Secretary Timothy Geithner (WDCpix)

Appearing before a House panel on Thursday, Treasury Secretary Tim Geithner made his best pitch for legislation granting the White House broad new powers to seize Wall Street firms when their collapse might torpedo others in the industry.

It didn’t go so well.

Image by: Matt Mahurin

“Mr. Secretary, I’m not a man that fears this administration or you,” Rep. Paul Kanjorski (D-Pa.) told Geithner. “But I do fear the accumulation of power exercised by someone in the future that can be extraordinary.”

Rep. Brad Sherman (D-Calif.) echoed those concerns, arguing that the bill represents “the most unprecedented transfer of power to the executive branch to make decisions about both spending and taxes in history — all without congressional approval.”

The tone of the comments could foreshadow a tough road ahead, not only for the White House, but for Financial Services Chairman Barney Frank (D-Mass.), who introduced legislation this week that grants the Treasury’s request to broaden the president’s “resolution authority.” The bill is one of the final pieces of the finance-reform puzzle that Frank has been putting together all year. But by conceding most of the administration’s requests, the Massachusetts Democrat — who asked no questions of Geithner Thursday — has riled others on his panel, who want to see more taxpayer protections in the bill.

Frank’s proposal would create an oversight commission to monitor and regulate Wall Street’s investment houses and other non-bank institutions to ensure that they’re on solid footing. Federal regulators could, for example, force companies to increase capital reserves or decrease the amount of debt they’re holding, if the scenario was deemed a threat to topple the firm.

The bill would also empower the White House to swoop in and dismantle failing Wall Street institutions in order to minimize the impact on the finance system as a whole — a strategy modeled on the authority of the Federal Deposit Insurance Corporation to intervene when commercial banks are threatening to fall.

To protect taxpayers, Frank’s bill aims to have failed-company shareholders and creditors cover the cost of the government help. If more money is needed, taxpayers would initially pick up the tab, to be reimbursed later by an after-the-fact tax levied against other large Wall Street institutions that would presumably benefit from the stabilizing effects of the government intervention.

Supporters maintain that the proposal does not empower bailouts at all, but would simply allow the government to manage the deaths of failed companies so they don’t drag down the financial system with them — a kind-of controlled euthanasia designed to protect consumers from the hubris of the finance industry.

“If we do have to step in, it will be very painful for those companies” Frank told MSNBC Thursday. “They will be put out of business. The CEOs will be fired. Shareholders will be wiped out. We are not going to have a situation where people can expect to be bailed out and live happily ever after.”

Geithner, for his part, denied that the proposal authorizes the White House to tap federal coffers at all. Asked by Rep. Maxine Waters (D-Calif.) if the bill grants “the authority to spend the taxpayers’ money to bail them out if you deem that to be a good way of handling that situation,” the Treasury secretary answered with one word: “No.”

Yet the House bill empowers the administration to make loans, buy assets, and invest in failing institutions if regulators determine those steps are required to prevent “serious adverse effects on financial stability or economic conditions in the United States.” To do so, of course, the White House would use taxpayer funds. And no monetary limits are specified.

And while the bill aims to recover the taxpayer dollars within 60 months of the bailout, Sherman notes that the White House would also have the authority to extend that deadline indefinitely.

“It could be 60 years,” he said.

That these bailout protections are limited only to those institutions whose failure is deemed a system-wide threat is another source of criticism on Capitol Hill. Many lawmakers and finance experts contend that that stipulation creates an unfair advantage for big firms over their smaller competitors. For example, they could get capital at lower rates if lenders know they have access to some level of federal lifeline. That dynamic, critics argue, would act to promote “too-big-to-fail” institutions, rather than reining them in.

“Why should the American people have to sit out there and see us creating mammoth organizations that nobody says we have the authority to control or limit, but we have the authority to help them when they get into trouble?” asked Kanjorski.

There are still other concerns. For example, some lawmakers are attacking the proposed bailout tax on large institutions, arguing that it should be collected beforehand as a type of insurance fund, rather than imposed after a competitor goes under.

“No more TARP. No more bailouts,” said Rep. Luis Gutierrez (D-Ill.). “Let them [the companies] create the fund, the systemic risk fund, that will guarantee that the American taxpayer will no longer have to be involved should they cause such a crisis ever again.”

Geithner responded that such a system would encourage even more risky behavior from the largest companies. “If you create a fund in advance, there’s a risk you’re going to create more moral hazard,” Geithner siad. “People will live the expectation where the government will come in and protect them. We don’t want to create that expectation. That’s why we think it’s better to do it after the fact.”

Meanwhile, conservatives and representatives in the finance industry are blasting the notion that solvent companies should be forced to pay to bail out the mistakes of competitors. “Should Ford bear the costs of compensating the taxpayer for what happened to G.M. and Chrysler?” asked Rep. Jeb Hensarling (R-Texas.).

Gutierrez pointed out yet another concern: Placing such broad new powers in the hands of Treasury leaders – who often arrive directly to the job from previous positions of power on Wall Street – creates the impression of the fox guarding the hen house.

“How do we know the next secretary of the Treasury won’t be the former CEO of Goldman Sachs as they have been in the past?” he asked. “They seem to be interwoven, and that’s what the American public sees.

“They see the interconnectedness in terms of their power, their influence and always to their benefit.”

Specifically, GOP leaders have dropped their insistence that the Senate consider amendments related to ACORN and immigration. Instead, they’re now demanding a vote on a provision to fund the unemployment insurance extension with stimulus funds, and another to move up the expiration date for the Troubled Asset Relief Program, which enabled federal bailouts of Wall Street firms — both non-starters with Democrats.

A third amendment — designed to end federal ownership of bailed out firms — has already been agreed upon.**

If Reid and the Democrats would just agree to a short debate on those three amendments, McConnell said, the Senate could pass the unemployment bill “this very afternoon.”

“This is not an effort to delay,” McConnell said.

Reid refused, arguing that TARP already has a sunset date, and that House leaders were not willing to accept the proposed GOP change.

“This isn’t the time to do that,” Reid said. “It’s just an effort to delay [and] divert attention from this most important issue.”

**Update: This post has been updated. Initially, the third amendment listed was a popular homebuyer tax credit. While party leaders have also reached agreement on that provision, it was not included in the list of amendments McConnell insisted Thursday should be a part of the debate.

Just three years ago, Marin county residents were busy raising money for a legal fight to stop Habitat for Humanity from building four homes affordable to families making under $56,000/year, saying it would “blight” their exclusive neighborhood of million dollar plus houses. (The project is still being debated.)

But now they are being welcomed with open arms in another part of the county as they renovate one of the foreclosed homes that even Marin has acquired a passel of. Habitat bought the house, which needs extensive rehab, for $215,00. It doesn’t sound affordable exactly to those of us in more affordable parts of the country, but in a county where the median home price is $800,000, I guess it qualifies.

Nothing like a wave of foreclosures to change those “Not In My Backyard” attitudes. This, by the way, is what affordable housing looks like in Marin.

As the Marin case shows, high-priced homes are increasingly going into foreclosure. Don’t be surprised to see Habitat next in a place like Palm Beach, Fla. Or maybe the group will take on even more foreclosures in Marin. The one constant about this crisis is that no region escapes its reach, even neighborhoods that once thought they were safe. For some once-exclusive cul-de-sac communities, it may be time to drop the NIMBY attitude,  roll up your sleeves,  and help out with the Habitat renovation.

Gross domestic product expanded at an annual rate of 3.5 percent in the three months ending in September, a significant spike from a relatively shrunken base. The economy had contracted at annual rates of 0.7 percent and 6.4 percent in the first and second quarters of this year, respectively.

The new numbers from the Commerce Department are likely to provide cold comfort for out-of-work Americans  — the national unemployment rate hit 9.8 percent in September, job growth historically trails other economic indicators, and GDP presents a very broad snapshot of the economy — but they could suggest a recovery is on the way.

Rep. Brad Sherman (D-Calif.) (house.gov)

In the wake of the recent financial meltdown, it sounds like a reasonable idea: A proposal granting the White House broad new authority to take over when a failing institution threatens to drag others — perhaps the whole economy — down with it.

Yet that proposal, included as a part of wide-ranging finance reform legislation moving through the House this month, is also sparking bouts of indignation on Capitol Hill, where at least one vocal Democrat says the provision represents an executive-branch power grab that would prop up too-big-to-fail institutions at the expense of smaller banks.

Image by: Matt Mahurin

“The key thing is that the executive branch have the power to commit, not just $700 billion, but $1 trillion or more without having to have Congress be involved at the time of the crisis,” Sherman charged last month during a hearing on finance reform.

The criticisms highlight the pickle facing Democratic leaders as they take steps to regulate the powerful financial services industry in the wake of the worst economic turmoil since the Great Depression — a downturn caused largely by the failure of Wall Street firms to leverage their exposure to risk. On one hand, the Democrats want to rein in the most complex and abusive industry practices in order to protect consumers from companies teetering beneath the weight of their own bad decisions. On the other, they don’t want their safeguards to prop up monster institutions that might require bailing out because they’ve become too big to fail. How to balance those goals will be no easy task — particularly with conservatives in one ear urging less government intervention and liberals in the other pushing for stricter consumer protections.

The Democrats’ proposals — one was introduced by the White House earlier in the year, and another was unveiled Tuesday by House Financial Services Committee Chairman Barney Frank (D-Mass.) — would grant the president new “resolution authority” allowing the government to swoop in and overtake investment houses and other non-bank institutions when their potential failure would put the larger financial system at risk – much like the current authority of the Federal Deposit Insurance Corporation to take over commercial banks when similar risks exist. The idea is to have the government escort the failed company into oblivion in ways that soften the blow on the larger marketplace.

The push to expand the president’s bailout authority gained steam last year, after Bush administration officials found themselves with few tools to manage the near failure of American International Groups and the actual collapse of Lehman Bros. — two firms falling outside of the FDIC’s regulatory umbrella.

After the fall of Lehman Bros., the perception that some institutions couldn’t be allowed to fail for fear of simultaneously pulling down the financial system led lawmakers to jump in with hundreds of billions of taxpayer dollars to prop up those companies.

The House bill is designed to remove the burden from taxpayers, proposing instead that shareholders — as well as financial institutions with assets exceeding $10 billion — ultimately pick up the tab when the government is forced to bail out a company for the sake of stabilizing the financial system on the whole. Still, that taxpayer safeguard does nothing to tackle the issue of moral hazard. That is, the nation’s largest financial institutions would still be insulated from certain risks, critics say, leaving them with distinct business advantages over smaller competitors.

David Min, financial markets expert at the Center for American Progress, said the resolution authority, by definition, has to be unlimited in order to maintain the government’s credibility as an effective backstop. But such a system, he added, will lower the capital costs for the largest institutions, making it more difficult for smaller banks to compete.

“The whole scheme of systemic stability really favors larger institutions and encourages them to become too big to fail,” Min said.

Sherman agrees. “That is a huge gravy train to the top 20 [financial institutions] because it allows them to borrow money at a lower rate,” Sherman said by phone last week. “Think of what this does to moral hazard.”

No stranger to taking on the finance industry, Sherman was a lonely voice in the push earlier in the year to apply more stringent executive compensation limits to bailed out Wall Street firms — a push that went precisely nowhere in the face of White House opposition.

Some economists, notably Paul Volcker, former chairman of the Federal Reserve and now head of the White House Economic Recovery Advisory Board, have an alternative solution to the too-big-to-fail problem. They want to put back the firewalls between commercial and investment banking — firewalls dismantled in 1999 with the repeal of the Glass-Steagle Act. But that proposal has gained little traction on Capitol Hill, where the finance industry remains a hugely influential player despite its role igniting the recent recession. Min said the Obama administration took a look through its “political lens” and decided to tackle finance reforms without reinstalling Glass-Steagle.

Frank’s panel will hold a hearing on the House legislation Thursday, with Treasury Secretary Tim Geithner testifying.

Expect some fireworks. At a Financial Services hearing last month, Sherman pressed Geithner to apply some limits to his request for new bailout powers. “Would great harm be done to this statute,” Sherman asked, “if we limited the executive branch’s authority to a mere $1 trillion?”

An annoyed Geithner eluded the question before reaching the conclusion that Sherman was “fundamentally mischaracterizing” the provision. The Treasury Department did not respond to requests for comment.

Sherman said he intends to offer a series of amendments addressing the issue during the Financial Services panel’s markup of the bill, which has yet to be scheduled. Included will be a provision to cap the president’s bailout authority at $1 trillion, and another to strip out the resolution authority language entirely. A potential third proposal — to create an oversight panel like that monitoring TARP funds — is one he’s leaning against.

“I’m not looking for a TARP on steroids with oversight,” Sherman said. “I’m looking for an end of TARP.”

The Wayne County auction of some 9,000 repossessed properties last week resulted in more than 80 percent of them failing to draw a single bid. And that’s even with the minimum bid starting at just $500.

The fact that Rust Belt cities such as Detroit and Cleveland are plagued with foreclosed properties isn’t a new development. But what happened at that Detroit auction gives a glimpse into how acute the problem is. WalletPop explains:

The auction didn’t go smoothly, however. Out-of-town speculators cherry-picked prime properties in areas such as the Boston-Edison district, while locals who showed up too late for registration weren’t permitted to take part.

That’s the scandal. One of the reasons distressed communities have begun fighting for tools such as land banks — public enterprises that allow a community to quickly acquire abandoned and foreclosed properties, so they can be cleaned up and put to use – is to prevent speculators from playing games with foreclosed properties, while local officials watch helplessly. But as we’ve reported, getting a land bank together can be a lengthy and complicated process. Communities like Flint, Mich., are spearheading the shrinking cities movement, which tries to deal with the problem of foreclosed properties by cordoning off abandoned areas of the city and letting the land return to nature. It can be a great idea for some communities, but to achieve it, local officials first need that land bank or some other way to gain control of abandoned and foreclosed homes and land.

Otherwise, you can end up with a situation like the Detroit auction, where out-of-town speculators with money and experience can out-bid any local community groups or investors who might want to actually rebuild neighborhoods, rather than just  play real estate games.

As Virginia Tech urban planning expert Joseph Schilling told TWI last spring, ““We do a pretty good job in this country of recycling cans and plastic bottles. But we do an awful job of recycling and reusing vacant properties.”

Until our national housing policy turns more aggressively toward encouraging and allowing more local control of foreclosed properties — and to providing some financial support for that effort — expect to see more sad situations like that Detroit auction. We have some of the answers to this, in innovative policies like land banks. Why aren’t we moving with urgency to use them?

“What was once the Bush recession is now the Bush recovery,” asks Cavuto, “or is that a stretch?”

“It defies logic that you could blame Bush for the banking problems,” says guest Jim LaCamp, “the banking system, and criticize the bailouts, and not give him a little bit of credit right now.”

Here’s the whole video:

And here’s how Fox used to cover the stock market: