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Regulators, lawmakers and the Federal Reserve Chairman are engaged in a Tug of War over the pace and reach of regulatory reform designed to prevent another financial crisis. In Congress, Barney Frank tried to shepherd through his House financial services committee a bill that would create an agency to regulate the sale of financial products to consumers, such a bill risks being neutered by moderate Democrats in the US House. Fed Chairman Ben Bernanke wrote to the senior Republican member of the same House committee warning of the potential for “unintended consequences” if a law that restricted the ability of credit card companies to increase charges was rushed into action. In Chicago, Gary Gensler, head of the Commodity Futures Trading Commission, warned that exemptions in another bill that imposes tighter rules on derivatives trading should offer at most “very narrowly defined” exemptions for end-users. There is concern among advocates for tighter financial regulation, both within and without the Obama administration and Congress, that the original proposals for reform are being watered down after a fierce lobbying effort from the financial services industry. Read more

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Home sales and orders for durable goods are likely to have risen in August, extending gains that have signaled the US is emerging from the worst recession since the 1930s, economists said before reports this week. Purchases of new and existing houses climbed to a combined 5.79M annual pace last month, the most in almost two years. Bookings for durable goods likely rose 0.4%, the fourth advance in five months. Housing and manufacturing, two areas that deepened the slump, are stabilizing as stimulus measures such as credits to first-time home buyers and “cash for clunkers” revive demand. While acknowledging the economy is healing, analysts project Ben Bernanke and his colleagues at the Federal Reserve will commit to keeping interest rates low when they meet this week. Read more

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Crude Oil prices broke above US$72 a barrel Wednesday after a US government report showed a bigger than expected decline in Crude Oil inventories. NYMEX crude rose US$1.58 to settle at US$72.51bbl, adding to Tuesday’s gain of UD$2.07, while ICE Brent rose US$1.81 to US$71.67.The gain came after the US Energy Information Administration reported that commercial crude oil inventories dipped last week by 4.7 million barrels, against expectations of a 2.4-million-barrel drop. The decline, pegged to a slowdown in imports, came alongside builds in gasoline and distillate stocks, a combination that analysts said could hurt the profitability of US oil refiners. Other commodities and equities also rose strongly Wednesday, inspired by a comment from US Federal Reserve Chairman Ben Bernanke that an economic recovery had begun, a signal demand for raw materials will rebound. Read more

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US Federal Reserve Chairman Ben Bernanke said Tuesday that the country’s economic recession is very likely over at this point. More and more data showed that the world largest economy is pulling out of the worst recession since the 1930s. Bernanke admitted that in responding to questions at the Washington based think-tank Brookings Institution. The central bank chief also expressed his confidence that the Congress will enact a revamp of the nation’s financial rule book to prevent future crisis from happening. “I feel quite confident that a comprehensive reform will be forthcoming,” Bernanke said. In a speech delivered Monday in New York to rethink the one year anniversary of the collapse of Lehman Brothers, President Barack Obama urged the Congress to enact legislation this year. US Treasury Secretary Tim Geither also said recently that it is essential that the financial overhaul should be implemented to avoid future crisis.

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US President Barack Obama will nominate Ben Bernanke to a 2nd term as Chairman of the US Federal Reserve Tuesday, keeping him on the job of guiding the world’s largest economy out of its deepest downturn since the Great Depression. Bernanke, whose appointment to a new, four-year term as head of the US central bank must be confirmed by the Senate, has flooded crippled financial markets with hundreds of billions of US$s in Fed liquidity and stepped in to attempt rescues of failing financial institutions such as Bear Stearns and AIG. Obama’s Democrats control the Senate, but Bernanke has faced criticism from lawmakers of both parties who say he has gone too far in extending Fed support that will be difficult to unwind, threatening future inflation. Investors have generally given Bernanke high marks on the job and had widely expected him to be kept on by Obama, although the announcement was not expected until later this year.

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US President Barack Obama said last week that the recession-hit US economy was showing “glimmers of hope” despite remaining under strain and promised further steps in coming weeks to tackle the financial crisis. “We’ve still got a lot of work to do,” Obama told reporters after a meeting with economic and regulatory teams plus Federal Reserve Board Chairman Ben Bernanke. But he added, “We’re starting to see progress.” Obama spoke a day after encouraging trade and jobless figures pushed stocks higher, and White House economic adviser Lawrence Summers predicted the economy would emerge from a sense of “freefall” by the middle of the year.

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