Receiving Wide Coverage ...
Beijing to D.C.: This Isn't Funny: America's political dysfunction has reached such heights that even foreigners are feeling compelled to speak up. China and Japan, which have stocked up on trillions of dollars of Uncle Sam's IOUs, began publicly expressing concerns that the interest payments on them could be in peril. "The clock is ticking," Beijing warned in its first official comments on the stalemate, while urging Washington pols to "ensure the safety of the Chinese investments." China directly held $1.3 trillion in U.S. government bonds as of July, Treasury data indicates. In Japan, which itself is a world leader in political gridlock, finance minister Taro Aso on Tuesday called on "the United States to resolve its debt ceiling stand-off without delay," the Financial Times reports. Japan's Ministry of Finance is worried that a U.S. default could cause investors to dump the U.S. dollar and push up the yen, hurting the nation's international competitiveness, the FT said. Back home, Senate Democrats are planning a vote this week to extend U.S. borrowing authority through 2014 in the latest sign that the political class's attention is shifting from the budget impasse to preventing a government debt default, the Wall Street Journal reports. The Treasury says the debt ceiling must be raised this month or it will be unable to pay all the country's bills. Treasury Secretary Jacob Lew is scheduled to answer questions about the debt ceiling on Thursday in front of the Senate Finance Committee, giving Republicans a chance to press him for potential areas of compromise, the Journal added. Back on Wall Street, traders remain largely of the view that Washington is engaged in political theater rather than mass suicide. The fiscal stalemate continued to weigh on stock prices Monday, but the market's volatility index, known as the "fear gauge," has merely hit a four-month high and remains far below its level during past crises. "We all tell ourselves, 'This is something that is not going to happen,'" David Coard, the head of fixed-income trading at the Williams Capital Group, told the New York Times. "This would be like a black swan event. It's not something that you would have thought that the U.S. could do in a million years."
The Falcone Has Crashed: It seems like those wily Wall Streeters had good reason all these years to fiercely resist admitting that their wrongdoing was, in fact, wrong. Exhibit One is Philip A. Falcone, the hedge fund high-flier whom the Securities and Exchange Commission knocked off his perch in August when Falcone admitted wrongdoing, agreed to pay $18 million and consented to a ban on acting as investment adviser for five years. The deal resolved two SEC civil lawsuits against the money manager and his company, Harbinger Capital Partners. The charges involved a failure to disclose to investors a $113 million personal loan Falcone took out from a Harbinger fund to pay his taxes, even as other investors were prevented from pulling their money. The billionaire's admission of "multiple acts of misconduct" as part of an SEC settlement are now having knock-off effects. On Monday, New York's top financial regulator, Benjamin Lawsky, used the admission to punish Falcone in an unrelated case, banning him for seven years from controlling insurance companies licensed in the state or serving as an officer or director of Fidelity and Guaranty Life Insurance, which is owned by NYSE-listed Harbinger Group (HRG), his publicly traded company. Ironically, the waves the SEC created with its insistence that Falcone admit wrongdoing are likely to complicate future agency efforts to exact similar admissions, the New York Times reports. "With the prospect that such admissions could come back to haunt defendants in other cases, legal experts say, there could be a chilling effect on the banks and hedge funds that regulators seek to punish. Investors might also use the admissions to bolster civil lawsuits. 'This is the event that is going to stick in the craw of every defense lawyer,'" Thomas A. Sporkin, a former SEC attorney now at Buckley Sandler, told the Times. Instead of settling, defendants might be more inclined to take a case to trial, straining SEC's resources at a time when its boss, Mary Jo White, is stressing the
Wall Street Journal
The Federal Reserve's decision to boost growth by continuing to buy $85 billion-a-month in bonds followed six months of tense negotiations inside the central bank and a stumbling effort to let the public know what was going on, the Journal reports. A small group of Fed officials has been privately
The Treasury Department's Office of Financial Research has
The government shutdown is throwing a wrench into
The Association of Mortgage Investors warned Monday of member concerns that investors could shoulder a significant portion of the
Financial Times
When JPMorgan Chase and Wells Fargo (WFC) launch the sector's third-quarter earnings season on Friday, they are expected to