Fed delays bond tapering

The Federal Reserve has decided against reducing its stimulus for the U.S. economy, saying it will maintain the pace of its bond purchases because it thinks the economy still needs the support.

The Fed says it decided to hold off on slowing the $85 billion a month in bond purchases to see more conclusive evidence that the recovery will be sustained.

In a statement after its meeting, the Fed says that the economy is growing moderately and that some indicators of labor market conditions have shown improvement. But it noted that rising mortgage rates and government spending cuts are restraining growth. Read more >>

Surging Student-Loan Debt Is Crushing the System

Student-loan defaults surged in the first three months of 2013, while efforts to collect bad loans are faltering, according to credit analysts and government audits. It is the latest twist in a college debt crisis that is hanging over recent graduates and dragging on the broader economy.

Credit-rating firm Equifax said $3.5 billion in government and private student loans went bad in the first three months of 2013, the most since the company began keeping track. The U.S. Department of Education said 6.8 million federal student loan borrowers are now in default, representing $85 billion in debt. And the department's systems for collecting the bad loans are struggling to keep up.

The Department's Office of Inspector General found in December that more than $1.1 billion in defaulted student loans were stuck in a sort of computer limbo. Read more >>

Sequester cuts are here to stay

Lawmakers and aides say they do not expect Congress to turn off budget sequestration before April and that negotiations to freeze the automatic spending cuts could drag into May or beyond.

Over the last few weeks, there has been increased speculation that the sequester would go into effect Friday but be addressed in a March deal to keep the government funded.
Don’t bet on it.

Sen. Richard Burr (R-N.C.), a member of the Finance Committee, predicted sequestration would last through the end of the year.

“Are we going to roll back the size of the cuts? No. I can promise you that,” said Burr.
President Obama has invited congressional leaders to meet at the White House on Friday, the same day $85 billion in automatic cuts are due to begin.

However, congressional sources do not anticipate a deal at that gathering or any time soon. Read more >>