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White House says next GDP will be bad

WASHINGTON, Oct. 23 (UPI) -- The White House Thursday came close to acknowledging a recession is under way, saying next week's gross domestic product report is expected to be bad.

Spokeswoman Dana Perino said she agreed with former Federal Reserve Chairman Alan Greenspan's assessment that there will be a significant rise in layoffs and unemployment.

GDP is the broadest economic measure of the nation's output of goods and services.

"I think that that is right, and I think that's what we have been saying, that we're in for a rocky road for -- on the employment front," Perino told the daily White House press briefing. "And we expect our GDP number next week not to be a good one. And the next quarter could probably be tough, as well."

Perino said there has been a "tremendous slowdown in our economy" and the Treasury Department has yet to actually put any of the $700 billion rescue package into the marketplace.

On the possibility of a new stimulus package, Perino said President George Bush is open to ideas but that realistically nothing will get done until after the elections when Congress reconvenes Nov. 17.

Bailout plans for homeowners being floated

WASHINGTON, Oct. 23 (UPI) -- Federal Deposit Insurance Corp. Chairman Sheila Bair told key senators Thursday the Treasury Department should move to guarantee some homeowners' mortgages.

The financial bailout has so far failed to cover the root cause of the financial meltdown, Bair told members of the U.S. Senate Banking Committee.

A temporary guarantee of mortgages "could be used as an incentive for servicers to modify loans," she said.

Bair advocated for a program that would end June 30, and claimed the federal bailout plan included the authorization for the U.S. Treasury to guarantee loans "to prevent avoidable foreclosures," The Washington Post reported.

"We are passionate about doing everything we can to avoid preventable foreclosures," Neel Kashkari, the interim assistant secretary for financial stability told committee members.

He said banks would restructure the loans with "very specific instructions consistent with our objectives."

Committee Chairman Sen. Christopher J. Dodd, D-Conn., emphasized the need for the program. "There are more than 10,000 foreclosures a day. I hope there's a deep appreciation that we need to get this moving," he said.

FBI: Banks receive hoax letters

WASHINGTON, Oct. 23 (UPI) -- Threatening letters containing white powder have been sent to more than 50 U.S. banks and financial institutions, the FBI said Thursday.

The letters, received by financial institutions in 11 states and the District of Columbia say "it's payback time," CNN reported.

"Steal tens of thousands of people's money and not expect repercussions. It's payback time. What you just breathed in will kill you within 10 days. Thank (word redacted) and the (Federal Deposit Insurance Corp.) for your demise," said one letter released by the FBI.

Most of the letters contained a powder that the FBI said is harmless. Even so, sending the letters is "a serious crime," even if they are a hoax, FBI spokesman Richard Kolko said.

CNN said the letters were all sent from Amarillo, Texas, to branches of Chase Bank; the FDIC and the U.S. Office of Thrift Supervision.

The U.S. Postal Inspection Service is offering a reward of up to $100,000 "for any information leading to the arrest and conviction of the person or persons responsible."

Nogales drug shootout leaves 10 dead

NOGALES, Mexico, Oct. 23 (UPI) -- Mexican police say 10 suspected members of a drug gang died in a shootout in the border city of Nogales that also left eight people injured.

Police told reporters the suspects at one point threw hand grenades at pursuing officers before their sport utility vehicle plowed into the wall of a jail, killing four people in the vehicle, the Arizona Republic reported Thursday.

U.S. law enforcement officials have noticed an increase in violence in Sonora due to outsiders challenging the control the so-called Sinola cartel has held in Nogales for several years, the newspaper said.

The running gun battle began Thursday morning when Sonora state police stopped an SUV for a routine inspection. A second SUV pulled up, shots were fired and both vehicles sped off with police in hot pursuit, police told the Tucson Citizen.

The incident in the city, located across the border from Arizona, was the latest dramatic incident in a surge of violence from the powerful smuggling rings operating along Mexico's northern frontier.

The San Diego Union-Tribune said Thursday that a 4-year-old boy was killed Wednesday night when the SUV his father was driving was caught up in a shootout between traffickers and police. It was not clear if the child died of a gunshot wound or from injures suffered when his father struck another vehicle.