Morning business headlines: 10-8-13
Tuesday, October 08, 2013 11:08 AM
Top U.S. bankers warn against prioritizing interest payments
Reuters: Top U.S. bankers have warned the Obama administration and Republican lawmakers that any move to pay interest on debt before obligations such as Social Security and payments to veterans would pose severe risks to financial markets and the economy, The Wall Street Journal reported. As the U.S. government moved into the second week of a shutdown with no end in sight, some lawmakers think prioritizing interest payments would placate bond investors if the government breaches its borrowing limit, the Journal said. Heads of the nation's largest financial institutions told the officials in meetings that prioritizing some payments would create insurmountable uncertainty for investors, drive up borrowing costs and disrupt markets, the Journal said, citing people familiar with the meetings.
Fannie, Freddie ease lending crunch during shutdown
CNNMoney: Fannie Mae and Freddie Mac have relaxed their rules that would have kept banks from approving mortgages during the government shutdown. Typically, Fannie and Freddie require lenders to verify a borrower's income with the Internal Revenue Service before closing on a mortgage. But last week, some lenders reported that they could not approve the mortgages because the shutdown had severely curtailed the IRS' operations. The government-backed mortgage giants have since said lenders could continue to issue new loans even without the IRS' confirmation. Borrowers who apply for mortgages will still need to sign an income verification request with the IRS. But verification can wait until after the government shutdown ends, and lenders can use other means to verify a borrower's income.
U.S. small business confidence dips, but improving trend remains
Reuters: U.S. small business optimism slipped in September as business owners worried about the economy's near-term outlook, but remained fairly upbeat on sales and expansion prospects. The National Federation of Independent Business corrected the August reading on its index to show 94.1 rather than 94.0. The September survey was conducted through Sept. 30, when funding for the government ran out, leading to a partial shutdown of federal government activities on Oct. 1.
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