The Obama administration is set to renew its push for higher capital requirements for banks at home and internationally as the main thrust of regulatory reform – a strategy that could get round the gridlock in Congress.

Washington's emphasis on capital has met resistance from some European countries and Japan. After last year's stress tests and forced capital raisings, some US institutions look healthier than their overseas counterparts.

A gruelling debate inside the Senate banking committee has raised the question of whether Congress can deliver a bill that President Barack Obama would be prepared to sign.

A mortgage crisis like the one that has devastated homeowners is enveloping the nation's office and retail buildings, and few places are likely to be hit as hard as Washington.

The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.

The new round of financial pain, which some had anticipated but hoped to avoid, now seems all but certain. "There's been an enormous bubble in commercial real estate, and it has to come down," said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog created by Congress to monitor the financial bailout.

Can living near a train station save your house?

Researchers looked at mortgage defaults in three cities and found something curious — the chance of foreclosure is higher in neighborhoods more dependent on cars, according to a report by the Natural Resources Defense Council, which included data from Chicago's Center for Neighborhood Technology. The report examined 40,000 mortgages in Chicago, Jacksonville and San Francisco.

The link became more obvious in looking at foreclosures after July 2008, when gas spiked over $4 a gallon, said CNT President Scott Bernstein, who studied foreclosures in the Chicago area. Bernstein found that gas price spikes provide an "early warning" of a rise in foreclosures in car-dependent communities.

Studies keep showing what we have known for a long time: Fighting foreclosures is a futile — and counter-productive — use of resources.

New studies by John Burns Real Estate Consulting and Standard & Poor’s Financial Services conclude that loan mod efforts only serve to delay the inevitable, resulting in future foreclosures.

The credit bubble allowed home buyers to get in over their heads, to buy more house than they could afford. Once prices came down and the refi pipeline closed down, it was game over for many of these buyers.

The Federal Reserve Board raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent and said the move will encourage financial institutions to rely more on money markets rather than the central bank for short-term liquidity needs.

“These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the central bank said today in a statement. “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.”

If there is one thing that gets investors twitchy, it is the fear that China is losing its appetite for US government bonds.

As the biggest and most liquid pool of assets in the world, the US Treasury market lies at the heart of the global financial system and allows the American government to finance its trillion-dollar budget deficits. Until recently, China has been the largest foreign official holder of US debt.

That is why the latest release of Treasury International Capital (Tic) data, showing that China’s holdings of Treasuries fell by a record amount in December, has caused something of a stir.