Financial Update

· TSX -264.68pts (Reuters) on a flurry of bad corporate news and weakening commodity prices
· DOW -168.58pts led down by a drop in the energy and materials sectors as commodity prices were pressured by concerns the economic downturn would hit demand
· Dollar -.61c to $82.97US.
· Oil -$3.73to $58.68US per barrel. Falling more than 5% as optimism waned that China's huge government stimulus plan will avert a prolonged global slowdown and Wall Street offered yet more evidence that consumers have gone into hiding.
· Gold -$18.00to $728.50US per ounce

Fannie Mae said yesterday that the housing finance company has taken over so many homes through foreclosures that if it were a town, it would be bigger than Dayton, Ohio
Survey suggests holiday spending could be at least as good as last year's

By The Canadian Press

TORONTO - A new survey suggests Canadians could spend more money this holiday season than they did last year, despite recent widespread indications that consumer confidence has been rattled.

Just over half of respondents to a survey by financial advisory firm Deloitte said they plan to spend at least as much this holiday season as they did last year. Meanwhile, 40 per cent said they will spend less this year, compared to the 25 per cent who said they planned to spend less in 2007 than they did in 2006.

Deloitte says lower gas prices will mean a little more money in pockets, but the survey also suggested shoppers will be looking for savings: 83 per cent said they planning to buy more items on sale this year.

And the sagging loonie will mean more shopping at home, the survey suggested, with 41 per cent saying they plan to shop south of the border, down from 64 per cent in 2007. There will also be less online shopping, the survey suggested, with 63 per cent saying they don't plan any holiday purchases on the Web.

A recent survey by the Conference Board of Canada found that consumer confidence fell in October to its lowest level in more than 25 years on dire global economic news.

U.S. offers help with mortgage payments Janet Whitman, Financial Post

NEW YORK -- As the weakening economy threatens to push millions more Americans into foreclosure, the U.S. government is dramatically stepping up efforts to keep homeowners from defaulting by making their monthly mortgage payments more affordable.

Fannie Mae and Freddie Mac, the two ailing mortgage-finance giants seized by the U.S.

government in September, Tuesday were given the authority to modify hundreds of thousands of home loans.

The new drive to keep Americans in their homes comes as U.S. government officials recognize that the ballooning foreclosure rate is putting the already-slumping economy in much greater peril.

It also follows mounting pressure on the government to help out homeowners since the authorization of a controversial US$700-billion, taxpayer-funded bailout for banks hurt by the housing crisis.

"Stabilizing our financial system will require not only strengthening our financial institutions so they are able to lend to our communities, but also helping homeowners avoid preventable foreclosures," Neel Kashkari, the interim U.S. Treasury official in charge of the bailout, said Tuesday afternoon during a televised Washington briefing announcing the new program.

The plan is less aggressive than a proposal pushed for by Sheila Bair, the outspoken chairman of the Federal Deposit Insurance Corp.

The proposal offered by the FDIC, a government agency that insures bank accounts, could have helped as many as three million of at-risk homeowners, instead of the hundreds of thousands under Tuesday's plan, by getting the government to provide a partial guarantee for bank losses on modified mortgages.

The plan from Ms. Bair, a Republican who's been cited as a contender to take over as U.S. Treasury Secretary in the Barack Obama administration, would have required about US$50-billion from the US$700-billion bailout fund.

Ms. Bair, who didn't attend Tuesday's press briefing, said in a statement the program unveiled was a step in the right direction, but doesn't go far enough to achieve wide-scale modifications of distressed mortgages.

"As we lend and invest hundreds of billions of dollars to help institutions suffering leveraged losses from defaulting mortgages, we must also devote some of that money to fixing the front-end problem: too many unaffordable home loans," she said in the statement, according to Bloomberg News.

Officials at the briefing said their mortgage-relief program would complement workout offerings from banks such as Bank of America Corp., Citigroup Inc., and J.P. Morgan Chase & Co.
It is targeting high-risk borrowers who are at least three months behind on their mortgage payments because of financial hardship, such as a lost job.

Homeowners who qualify could see their mortgage payments trimmed to 38% of their monthly income, a reduction achieved by cutting the interest rate, extending the life of the loan or putting off payment on part of the principal. Monthly interest rates for some borrowers could fall as low as 3%.

"As housing prices have fallen, delinquencies on mortgages have tripled... [hurting] families, their neighbours, whole communities and the overall housing market," said James Lockhart, director of the Federal Housing Finance Agency, an independent federal agency that now oversees Fannie and Freddie. "We need to stop this downward spiral."

Fannie and Freddie, which own or guarantee about 58% of all single-family mortgages across the United States, could end up offering less burdensome mortgage payments for hundreds of thousands of homeowners.

With Fannie and Freddie-backed mortgages representing only 20% of serious delinquencies, government officials are hoping for a broad adoption of the new, streamlined mortgage-workout process to come to the aid of the millions more Americans facing foreclosure over the next couple of years.

As an incentive, servicers, the companies that handle monthly mortgage payments, would be paid US$800 for each modified loan.