This is IN THE NEWS in
VOA Special English.
This was not a good week
for American economic news.
Ben Bernanke gave his
midyear report to Congress. The central bank chairman said "the economy
continues to face numerous difficulties." These include ongoing pressures
in financial markets, falling house prices and a softening labor market. They
also include rising prices of oil and food.
Ben Bernanke told
lawmakers that inflation is too high. He said a top priority of the Federal
Reserve is to bring it under control. He says that whether the economy is
technically in a recession or not, families clearly are facing hardship.
The Commerce Department
said Americans spent less on cars, furniture and restaurant meals last month as
fuel prices rose.
In the housing market,
some experts say the worst may not be over yet. Last Sunday, the government
announced a rescue plan for America's two biggest mortgage finance companies,
Fannie Mae and Freddie Mac.
The Treasury and the
Federal Reserve said the government is prepared, if needed, to lend them money
and buy some of their stock. The plan requires congressional approval.
Fannie Mae is the
Federal National Mortgage Corporation. Freddie Mac is the Federal Home Loan
Mortgage Corporation. They own or guarantee more than five trillion dollars of
mortgages, almost half of all housing debt in the country.
them but they are owned by shareholders and publicly traded. Fannie Mae was
created in nineteen thirty-eight as a result of the Great Depression. Freddie
Mac was created in nineteen seventy.
Fannie and Freddie help
lower borrowing costs for millions of homebuyers. They are called
government-sponsored enterprises. They are not officially guaranteed by the
government. But financial markets have always trusted that the government would
never let them fail.
Now, after billions in
losses, President Bush is urging
Congress to act quickly on the legislation. Critics of the rescue plan see a
huge risk for taxpayers.
Adding to investor
concerns this week was one of the biggest bank failures in American history.
California-based IndyMac was a major home lender. The government seized the
bank last Friday after people started taking their money out.
IndyMac is among more
than twenty banks under criminal investigation for possible wrongdoing in the
mortgage lending industry.
At the White House,
President Bush told a news conference on Tuesday that the banking system
"basically is sound." He pointed out that deposits are protected by
the government up to one hundred thousand dollars.
He also noted that the
economy has continued growing, though slower than he would have liked.
"We're going through a tough time," he said, adding, "I believe
we will come through this challenge stronger than ever before."
that's IN THE NEWS in VOA Special English, written by Brianna Blake. I’m Steve