· Fin reg reform – vote Tues night fails again; the vote was identical to the one held Mon night; like that vote, Republicans were able to maintain their opposition. Once again, Democrat Ben Nelson voted against moving forward to start debate on the issue. Republican opposition shows “no signs of fading” per the Journal. Similar votes are expected on Wed and Thurs. Republican Sen Sen. George Voinavich said he may switch sides and vote w/the Dems if it becomes clear bipartisan talks are failing. WSJ
· Fin Reg reform – Republicans offer a plan of their own – the GOP plan would, among other things, tighten regulation of Fannie and Freddie; the GOP plan would allow for the liquidation of a troubled firm, but to be paid for by the institution’s creditors and shareholder vs. a bailout fund – NYT
· Fin reg reform - Sen Lincoln, whose Ag Committee passed bill that would force banks to wall of swaps desks, says she isn't sure whether this provision will pass through the full Senate; in both parties have said Lincoln's bill goes too far and it could be stripped out of a final piece of legislation.
· Fin reg reform – CME is opposing a plan by the US commodity regulator to limit speculative energy trading by hedge funds, investment firms, banks and oil companies. FT
· Fin reg reform – auto dealers seek exemption – “dealers say the measure would drive up the cost of auto financing because it would require hiring more people to follow federal regulations. They say it also could limit the types of financial products offered” WSJ
· Goldman hearings part of a broader PR campaign to push through financial regulatory reform – “Democrats Use Goldman to Push Bank Overhaul” NYT
· Fund investigations – the SEC is looking into the use of side pocket deals among hedge funds - WSJ
· Health Insurers – positive news on the regulatory front – insurers will be able to apply taxes, regulatory fees, and other expenses, to the meet the new MLR requirements. WSJ
· Washington Post says economy is recovering, but test looms – “With federal stimulus spending beginning to taper off over the second half of the year, the fragile recovery in the housing markets showing signs of petering out and exports unlikely to create the same boost over the next nine months that they did over the past nine months, it will be up to American consumers to pick up the slack and drive a continued expansion” Washington Post.
· Reid reverses and says to act on Climate first before immigration. Time.
· FOMC preview – from M Feroli – note this was published Mon night - At the conclusion to the upcoming FOMC meeting on Wednesday, we expect the Fed to leave the target funds rate at 0-0.25% and to reiterate the expectation that rates are likely to remain exceptionally low for an extended period. This view is based on the fact that the three conditions given for the extended period language -- low rates of resource utilization, subdued inflation trends and stable inflation expectations -- still hold at this meeting as much as they did at the prior meeting. While the statement language is conditional on forecasts of these three variables, we doubt the FOMC forecasts have changed so materially that highly accommodative monetary policy is no longer seen as appropriate. In particular, the committee's growth outlook, and hence resource utilization outlook, may have been revised up some, but they have probably also revised down their inflation outlook. On balance, we don't think these forecast revisions will alter the committee's expectation for the most likely path for policy rates.
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