Morning Scan
Thursday, November 19, 2009
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Receiving Wide Coverage ...
Too Big to Fail: The House Financial Services Committee voted Wednesday to give government the power to break up large financial firms whose collapse might threaten the broader economy, despite aggressive lobbying by major financial institutions to kill the measure. The Journal said the amendment "illustrates how some lawmakers are willing to go beyond the authority sought by the White House — which stopped short of giving regulators power to break up healthy firms — in the redrawing of the financial world's regulatory framework." The paper's "Heard on the Street" column took issue with a measure approved by the committee that would allow banks to issue government-backed debt in difficult periods. The column said lawmakers must ensure banks can't borrow at below-market rates because of perceived government backing. "Instead, Congress is heading in the opposite direction …" and this could "dissuade banks from ensuring balance sheets are resistant to funding pressures, and bank creditors from doing proper analysis." A story in the Post said the House Financial Services Committee is inching toward colossal changes to the relationship between Washington and Wall Street as it tweaks its regulatory reform proposal.
Housing Starts: The Commerce Department released data showing housing starts fell unexpectedly in October to the lowest level in six months amid bad weather and concern about extension of the home-buyer tax credit. The Journal said, "the U.S. housing market is sputtering again, adding to doubts about the vigor of the economic recovery." The Times said the data is "resurrecting fears that the housing market may be slow to recover." Wall Street Journal, New York Times
Amex Goes Mobile: American Express agreed to buy Revolution Money, an Internet-based payments system that has financial backing from AOL founder Steve Case, for $300 million. The Journal described Amex as "seeking to attract young customers who want to pay for goods and services with new types of technology." The Post called the deal "the latest move by one of the credit card giants to add a service that has been increasingly in demand by consumers, especially younger ones." Wall Street Journal, Washington Post
Bad Day for Gift Cards: In her Post column, Michelle Singletary wrote that the Federal Reserve should have gone further and prohibited any dormancy in its recent rules on gift cards. In the Journal's "Cheapskate," Neal Templin went even further, questioning why anyone would want to use gift cards in the first place. "Suppose someone invented a gift card so versatile it could be used almost anywhere to buy almost anything. This gift card would be good forever and would be accepted in many foreign countries. It would be available in multiple denominations and sold in multiple locations … Wait a minute. Somebody already invented that go-anywhere gift card. It's called cash."
Wells Fargo Settles: Wells Fargo agreed to buy back $1.4 billion in auction-rate securities it sold to investors before the market for those securities dried up last year, settling a lawsuit brought against the firm by California's attorney general. Wall Street Journal, New York Times
Wall Street Journal
Mortgage restructuring for strapped homeowners has emerged as a rare growth area in the economy as companies in the field keep hiring.
The choice of bond-fund powerhouse Pacific Investment Management Co. to size up risk in insurers' home-mortgage bonds raises anew conflict-of-interest questions.
In an op-ed, former SEC Chairmen, Roderick Hills, Harvey Pitt, and David Ruder argue against changing accounting standards to let banks hide bad assets. "The Obama administration is on the verge of transferring accounting standards responsibility from the SEC to a systemic risk regulator. Such a radical move would have extremely negative consequences for our capital markets."
Rep. Ron Paul (R-Tex) and Sen. Jim Demint (R-SC) argue in an op-ed that Americans deserve a transparent Federal Reserve.
New York Times
An article on the front of the business section about material loss reviews by the inspectors general of the banking regulators said: "In what sounds like an episode of 'CSI: Wall Street,' dozens of government investigators — the coroners of the financial crisis — are conducting post-mortems on failed lenders across the nation. Their findings paint a striking portrait of management missteps and regulatory lapses. At bank after bank, the examiners are discovering that state and federal regulators knew lenders were engaging in hazardous business practices but failed to act until it was too late."
An article said that, while identity theft is on the rise, so are products to help prevent it: "New approaches include scouring the Internet in search of signs that criminals have your information, so you can move to block them. Others focus on keeping your data away from criminals in the first place, locking it down while you bank, shop or do other personal tasks online."
In the Style section, columnist Michelle Slatalla complained about the phone calls her husband is getting from Chase Home Finance because she usually pays the mortgage during the grace period rather than on the first of the month. "As if a bank wouldn't drag its heels if it were supposed to pay me every month. Remind me again, how many days does it take for a bank to 'process' my deposits? And by the way, isn't Chase the same bank that recently attempted to slip a credit-card rate increase past me? Nice try, guys."
Washington Post
The administration could extend the unpopular Tarp program but stem some of its unpopularity by putting $200 billion toward paying down the national debt.
, with contributions from Maria Aspan and Cheyenne Hopkins.
