Receiving Wide Coverage ...
Mixed Signals: Fed Chair Janet Yellen went to Wyoming and all she brought back to Washington, D.C., was a lousy T-shirt, with no better sign whatsoever of when short-term interest rates will rise. At the Kansas City Fed's yearly economic symposium in Jackson Hole, Wyo., Yellen gave a slew of mixed signals on whether she thinks the U.S. job market has improved enough yet to warrant a rise in rates, the Wall Street Journal reported. Most investors have made a mental note that the middle of next year is when short-term rates will rise. But now that assumption may be reconsidered. Leaders of the European Central Bank and the Bank of Japan also voiced support for maintaining economic policies that keep rates low, in an attempt to spur job and wage growth, the New York Times said.
Wall Street Journal
While the world waits on Yellen and the Fed to decide if the job market is strong enough, investors must play a delicate balancing act in managing their stock portfolios. Stocks are expected to continue to perform well, but the 10-year Treasury note and other government bonds have tumbled amid geopolitical concerns in the Middle East and a revival of European economic woes.
Some state governments are outraged by proposed capital rules intended to strengthen banks' liquidity holdings and hopefully prevent a repeat of the financial crisis. That's because municipal bonds won't count as highly liquid assets, which states say will cause banks to leave the muni bond market. Regulators pooh-pooh states' concerns, saying that banks buy muni bonds not to boost their liquidity, but to earn income. "There's a lot of angst over it, but we don't think it's going to have a real impact" an unnamed source told the Journal.
The Export-Import Bank, which partners with private banks on billions of dollars in loans, offers political grist for both Democrats and Republicans. The insight comes ahead of a possible Congressional fight whether to extend the agency's charter.
Are smaller banks next on the government's hit list? Attorneys for some banks are trying to ascertain patterns in the settlement terms the Justice Department reached with Bank of America, JPMorgan Chase and Citigroup to determine if and how their clients will be fined and/or prosecuted. The Federal Housing Finance Agency may be the source of the next wave of big settlements, as 18 banks have been involved in talks with the agency during the past three years regarding a lawsuit that claims they misled Fannie Mae and Freddie Mac.
New York Times
Bank of America's purchase of Countrywide Financial was the "single worst corporate acquisition ever. Bar none," Gretchen Morgenson writes in a Times column, amid speculation that Countrywide co-founder Angelo Mozilo may be the target of an upcoming civil lawsuit from the Justice Department. Morgenson then provides a list of Mozilo's sins, cautioning that, "given space constraints, this is by no means a complete list." Among them were that the firm "routinely gave defaulted borrowers incorrect figures on how much they owed and added bogus fees to their accounts without notice." Morgenson suggests the DOJ should perhaps also go after Countrywide's directors, who allowed Mozilo to preside over the company's institutional mendacity.