Stock Preacher

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

Popularity: 1% [?]

Former Federal Reserve Chairman Alan Greenspan said yesterday in NYC that he is more worried about the increasing US debt than the weakening US$. In a speech to the Council on Foreign Relations in New York, Mr. Greenspan said he is “not overly concerned” about the most recent decline in the dollar, which has hit a 14-month low against the Euro and other major currencies. “Remember, the dollar surged when the crisis began as we still conceive dollar as safe heaven. We are now back to the levels just prior to the crisis,” he said. Also, Mr. Greenspan expressed concern about the long-term costs to the United States from the increasing national debt, which according to him is the “most worrisome aspect of the economic agenda in the United States.” Read more

Popularity: 1% [?]

Consumer credit in the USA fell by a 5.8% annual rate in August to US$2.46T, the Federal Reserve reported Wednesday. The US$12B dollar decrease, much worse than the US$7.5B decline that economists forecast, followed a record cut of US$19B in July, or a 9.1% annualized drop. For August, consumer credit in revolving loans, a category that includes primarily credit card debt, plunged by 9.9% at an annual rate. Demand for revolving credit used to finance cars, vacations, education and other things, meanwhile, was down 1.6%. The strength in consumer borrowing will continue to be weak as job layoffs are rising, according to economists. The Labor Department reported last week that the unemployment rate rose to 9.8 percent in September, the highest in 26 years. Many economists believe the rate might hit double digit next year.

Popularity: 1% [?]

Household wealth in the USA increased by US$2R in the Q-2 Y 2009, ending the biggest slump on record. Net worth for households and non-profit groups climbed to US$53.1T from US$51.1T in Q-1, marking the first gain since Q-3 Y 2007, according to the Federal Reserve’s Flow of Funds report yesterday in Washington, DC. The government began keeping quarterly records in 1952. The advance reflected the biggest quarterly jump in stock prices since 1998 and the first increase in home values in more than two years. Together with increased savings and less debt, the gain in wealth is part of the mending process consumers will undergo in coming years before spending can gain speed. Supplemented by federal stimulus measures such as the cash- for-clunkers program, tax credits and extended jobless benefits, consumer spending this quarter has started to improve following the biggest slump since 1980. Read more

Popularity: 1% [?]

Stephen Friedman, chairman of the New York Federal Reserve Bank’s board of directors, resigned last Thursday amid questions about his purchases of stock in his former firm, Goldman Sachs. Mr. Friedman, a retired chairman of Goldman Sachs who has led the New York Fed’s board since January 2008, said he quit to prevent criticism about his stock buying from becoming a distraction as the Fed battles a severe US recession. “Although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper,” he said in a letter of resignation to New York Fed President William Dudley. “The Federal Reserve System has important work to do and does not need this distraction,” Friedman said.

Popularity: 6% [?]

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.

Popularity: 5% [?]