Morning Scan
Tuesday, November 17, 2009
|
Updated every business day, circa 9 a.m. ET. To receive by email, click here. Links may require registration/subscription. |
Receiving Wide Coverage ...
Bernanke's View: Federal Reserve chairman Ben Bernanke warned that high unemployment and banks' reluctance to lend will likely slow the economic recovery next year. The Journal said his comments "marked a mild departure for the Fed chief" who has spent months reassuring the public that low interest rates and government rescue programs had planted the seeds of an upturn. The Post said "Bernanke's focus on the weak job market and his opinion that inflation will remain subdued show that he is looking to keep the Fed focused on supporting growth for quite a while longer by leaving interest rates at rock-bottom levels." The papers also focused on Bernanke's reassurances about the recent fall in the value of the dollar. The Times said "it is rare for Fed officials to comment on exchange rates, which for decades have been the responsibility of the Treasury Department." Wall Street Journal, New York Times, Washington Post
Barofsky Faults N.Y. Fed: A report by the inspector general for Tarp concluded that the New York Fed gave up much of its power in high-pressure negotiations with the American International Group's trading partners last year." The Journal said the audit "provides a window into a bailout effort that has been shrouded by a lack of disclosure … and questions over why the U.S. government in effect funneled tens of billions of dollars to the U.S. and European banks that were AIG's trading partners." Wall Street Journal, New York Times, Washington Post
A separate story in the Journal examined criticism that Tarp funds have been directed to banks that government officials knew were troubled. "The problems put taxpayers at risk of losing as much as $5.1 billion invested in the banks since TARP was launched in October 2008," the paper said. "The mounting problems deepen questions about how the $700 billion program was run."
GMAC Replaces CEO: GMAC Financial Services said it had replaced its chief executive, Alvaro de Molina, with Michael Carpenter, a company director who had previously led Citigroup's global investment bank. The papers noted that de Molina's departure comes as GMAC seeks a third round of assistance from the U.S. Treasury. The Journal said "the forced resignation of Alvaro de Molina after only 19 months as chief executive caps a series of clashes with regulators and mounting board frustration over his management of the Detroit company." Wall Street Journal, New York Times, Washington Post
Lehman Sues Barclays: Lehman Brothers' bankrupt estate sued Barclays Capital to recover billions of dollars of what Lehman says were excess assets improperly transferred to the British bank when it purchased Lehman's broker-dealer business last year. Wall Street Journal, New York Times
Wall Street Journal
A front-page story said the FDIC has become American's newest land baron. In the past two years, the FDIC has taken over 150 failed banks. In the process, it has seized more than 5,000 houses, subdivisions, buildings, parcels and other foreclosed assets. The paper said taxpayers will be "grappling with this flotsam" for years to come.
A story previewed the grilling House lawmakers are expected to give B of A executives over notes and memos from the bank and its outside counsel, which were written when the company was considering pulling out of the Merrill deal.
The Federal Reserve proposed new regulations aimed at limiting fees and expiration dates associated with retail gift cards.
Deutsche Bank CEO Josef Ackermann called for a careful approach to global bank regulation and suggested a financial fund be created to help banks recapitalize themselves and wind down troubled assets. He didn't provide details of what such a fund would look like, but said it could help bring Europe closer to building a Europe-wide financial regulator, of which he has spoken in favor in the past.
"Heard on the Street" questioned JP Morgan Chase's willingness to pay out such a big price for the remaining 50% of Cazenove, its U.K. joint venture, when there was no other buyer. It said that the U.S. bank's plans to pay $1.7 billion "implies a value almost double the most recent quoted share price and far above what J.P. Morgan likely would have paid under a formula agreed when the joint venture was set up."
Dave Kansas reviewed "For Crying Out Loud," Leo Melamud's book about bringing electronic trading to the Chicago Mercantile Exchange, long fabled for its open outcry system of trading. "The financial world is very New York-centric … It is perhaps for these reasons that Chicago's success in the financial markets has gotten short shrift. That's too bad, because it's a great story."
Peter Wallison, a senior fellow at the American Enterprise Institute said current proposals for financial reform would establish 'too big to fail' as a national policy.
New York Times
Paul A. Volcker, a former chairman of the Federal Reserve Board, told the paper in an interview that a proposal to give banking regulators authority to block accounting standards is "a terrible idea."
Washington Post
A Treasury Department program, focused on state and local housing finance agencies, will inject $29 billion into these groups next year, according to data to be released on Tuesday.
In a column, Allan Sloan cites the financial turkeys of the year, including Citigroup selling its energy trading business, Phibro, too cheap, and Treasury selling Troubled Asset Relief Program warrants the wrong way.
, with contributions from Maria Aspan and Cheyenne Hopkins.
