Morning Scan

Wednesday, June 16, 2010

Receiving Wide Coverage ...

Reconciliation Gets Under Way: The Journal said a Congressional conference panel agreed to increase deposit insurance and jettison a proposed watchdog for credit-rating firms, "giving two big triumphs to the finance industry in the final shaping of a financial regulation overhaul." The Times looked exclusively at the decision to strip new conflict of interest rules out of the legislation, which it described as "leaving in place a process that many analysts say contributed to the proliferation of troubled mortgage-backed securities that were a cause of the 2008 financial crisis." An article in the Post described the "circus atmosphere" of the conference, but didn't report on anything that was accomplished. Wall Street Journal, New York Times, Washington Post

The Times said a group of 15 academics, have written a book, "The Squam Lake Report," to be released Wednesday, that offers up proposals for financial reform. "About half of the group's eight core recommendations … are strongly reflected in the two bills that are now being merged by a conference committee. But the scholars also say the legislation contains flaws that have resulted from political imperatives rather than sound economic thinking."

Progress on UBS Tax Deal? Switzerland's lower house of parliament approved a bill that would allow the government to hand over the names of thousands of alleged U.S. tax dodgers to American authorities. The papers noted that Tuesday's vote doesn't assure that the agreement will be ratified, since the issue could still be put to a referendum that would delay any resolution until next year. Wall Street Journal, New York Times, Washington Post

Mortgage Morass: The Journal said a new forecast from Fitch Ratings casts further doubt on the efficacy of the federal government's mortgage modification program; the ratings agency expects most borrowers who get lower mortgage payments under the program will default within 12 months, in many cases because they are also burdened by credit-card debt, car loans and other obligations. An article in the Post suggests these borrowers have more to fear than just losing their homes; it said lenders have gotten more aggressive in efforts to recoup money lost in foreclosures and other distressed sales. Wall Street Journal, Washington Post

Wall Street Journal

A story on the front page of the Money & Investing section said a Senate panel asked the SEC's inspector general to review the "revolving door" many SEC staffers use to find jobs with companies they once regulated; and the inspector general revealed that he had already undertaken such an investigation.

Goldman Sachs Chairman and CEO Lloyd Blankfein assured the firm's retired partners at a meeting Tuesday that clients are standing behind the company. The paper said, "there is no sign that Mr. Blankfein, who took over as CEO in 2006, has lost the support of the firm's board or Goldman alumni."

Lehman Brothers Holdings' European administrators, PricewaterhouseCoopers LLP, will unveil a proposal today to expedite the return of as much as $22 billion of assets to the failed bank's unsecured creditors.

"Deal Journal" looked at the "curious" timing of Fitch's recent decision to recalibrate its muni debt ratings, pointing out that Warren Buffett is warning of a "terrible problem" in municipal debt and has trimmed his investments.

A review of "More Money Than God," by Sebastian Mallaby, said, "If the book has a big idea, it is that hedge funds are an overall boon to Wall Street… Given that the markets have not covered themselves with glory in recent years, a bit more skepticism might have been in order."

An op-ed by Alan Blinder, a professor of economics and public affairs at Princeton University and vice chairman of the Promontory Interfinancial Network, and a former vice chairman of the Federal Reserve Board, said history will judge favorably the Obama administration's strategy of TARP, fiscal stimulus and bank stress testing.

New York Times

A story on the front page of the business section said the Build America Bonds program has run into problems; banks are charging larger commissions than they do for "normal municipal bonds," and Build American bonds may also be priced too cheaply. "As if all this were not enough, Wall Street banks — which have pocketed hundreds of millions of dollars in fees from the program — are now releasing research reports warning that states' financial woes may make the bonds less attractive. Some banks are even telling investors how to bet against Build America Bonds."

The paper carried an AP story reporting that the Federal Reserve released its final rules aimed at protecting consumers from high late payment fees and other charges on credit cards. Issuers now cannot charge a penalty fee of more than $25 for a late payment.

, with contributions from Kate Davidson and Paul Davis.