OVERNIGHT MONEY: Taking a look at the FHA

THURSDAY'S BIG STORY:

Shoring up housing: Housing and Urban Development Secretary Shaun Donovan will testify before the Senate Banking, Housing and Urban Affairs Committee on oversight of the Federal Housing Administration (FHA) following a report in November that shows the agency's cash reserves are low and what might need to be done to ensure the future of the FHA. 

The FHA is facing a $16.3 billion loss, raising the specter of a possible taxpayer bailout for the first time in its nearly 80-year history. 

An independent audit estimates that the mortgage insurer, which has more than $1 trillion worth of loans in its portfolio, is still struggling from the from bad mortgages taken on from 2007 through 2009. 

“FHA has weathered the storm of the recent economic and housing crisis by taking the most aggressive and sweeping actions in its history to reform risk management, credit policy, lender enforcement, and consumer protections,” Donovan said last month.

“During this critical period in our nation’s economic history, FHA has provided access to homeownership for millions of American families while helping bring the housing market back from the brink of collapse to a point where the outlook is positive and recovery is under way.”

Sen. Bob Corker (R-Tenn.), a member of the Senate Banking Committee, has said that the "FHA has strayed a long way from its original mission." 

Democrats and housing industry advocates have called for changes at the struggling agency. while Republicans have said the losses reflect the need for a major overhaul.

WHAT ELSE TO WATCH FOR

Done deal: The Senate is expected to vote on a measure that would grant normal trade relations to Russia. Passage of the House bill would send the measure to President Obama's desk for his signature.

The bill also contains human rights provisions aimed at punishing those accused of murdering lawyer Sergei Magnitsky and other human rights violations. 

Sens. Ben Cardin (D-Md.) and Jon Kyl (R-Ariz.) said on the Senate floor that they are willing to look to other bills to try to make the Magnitsky provisions apply to all countries.

Teetering on the edge: The Joint Economic Committee (JEC) will chat on Thursday with Mark Zandi, chief economist for Moody's Analytics, about what could happen to the economic if Congress and the White House can't reach a deal and other consequences of any changes in policy. 

LOOSE CHANGE

Senate side chat: Sen. Mark Pryor (D-Ark.) said his lunch chat today with Vice President Biden and Sen. Jon Tester (D-Mont.) didn’t really delve into policy weeds like the estate tax.

The administration wants less generous estate tax parameters than the current policy. Tester and Pryor, among other Senate Democrats, want to extend the current $5 million exemption and 35 percent top rate.

“He was kind of holding court in there, because as soon as he sat down, everybody started coming over,” Pryor said. “It was more about being in the Senate, back when Strom Thurmond did this. It was more that kind of thing.”

(And in case you were wondering: Pryor said Biden ordered a salad.)

Sen. Tom Coburn (R-Okla.) suggested he’d be OK with higher tax rates on television Wednesday morning. What’d his colleagues think of that stance? “Haven’t asked,” Coburn said.

FISCAL CLIFF HEADLINES

— Obama, Boehner hold phone call on debt talks

— Geithner: White House ‘absolutely’ willing to scuttle deficit deal over tax rates

— Hatch: Geithner 'irresponsible' on 'fiscal cliff'

— Treasury details 'McConnell Provision' on raising debt limit

— Portman warns White House on debt ceiling

— Murray: GOP protecting wealthy against tax increases is ‘detrimental’

— Cantor: Dems must reveal spending cuts to move 'fiscal cliff' deal forward

— Durbin says Boehner 'endangers' economy if no vote on middle-class tax rates

— Reid blocks Senate vote on Obama's deficit-reduction plan

— Taxpayer group outlines 'fiscal cliff' punt

— GOP Rep. Jones says he could buck party on middle-class tax vote

— GOP Sen. Lee becoming 'less optimistic' on fiscal cliff deal

ECONOMIC INDICATORS

Initial Claims: The Labor Department releases its weekly filings for jobless benefits, a day ahead of November's job numbers.

Mortgage Rates: Freddie Mac is releasing weekly data on fixed-rate mortgages, which have hit historic lows.  

Challenger Job Cuts: A measure of how many jobs cuts are planned by U.S. employers in November. 

WHAT YOU MIGHT HAVE MISSED

— Report: White House to seek $50B in relief for Hurricane Sandy

— Obama warns business GOP debt ceiling 'game' will hurt economy

— Supporters vow to press ahead on online sales tax

— Boxer mocks Boehner's deficit proposal as his 'happy holiday gift'

— Consumer bureau, Chicago join forces in hunt for predatory lending

— Economy adds 118,000 jobs despite hurdles

— AARP hits Capitol Hill to warn against benefit cuts in deficit deal

— Service sector's expansion picks up pace in November

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