Monday, May 10, 2010

Todays Top Stories; Washington Financial regulatory overhaul; Greece, Sen. Dodd

  • Washington Financial regulatory overhaul – key votes upcoming – banking lobbyist sources think it is
    increasingly likely that the proposed “Volcker Rules” will be approved and attached to the final Dodd bill; the Lincoln Blanche proposal to force banks to spin off their swaps desks, which his opposed by Volcker, the industry, and the White House will face a closer vote although it too may wind up passing. An industry group thinks the passage of the Lincoln plan would increase the cost of a $200K mortgage by $6-10K+. Lincoln has been refusing to modify her provision. FT 00144feab49a.html
  • Volcker against proposal forcing banks to spin off their swaps desks – the former Fed chief and current WH advisor has voiced some concerns about Senator Blanche Lincoln's proposal to regulate the derivatives market much more tightly, saying that he is not in favor of forcing banks to spin off their derivatives operations. NYT
  • Fed update – removing “extended period” from the Fed language will cause 2yr yields to spike 50bp – Bloomberg·
  • The Fed has successfully fought off an amendment to the Dodd bill that would have opened its monetary policy decisions to Congressional Audit although a less severe amendment, which would subject the Fed to audits on other parts of its functioning, looks set to become law. The Fed would be compelling by Dec 1 to divulge the names of all companies that benefited from the emergency lending programs. NYT
  • Financial regulatory reform – Levin considering legislation that would ban banks from “betting” against their customers. The legislation would “prohibit banks from taking the opposite side of the deal for their own account”. WSJ
  • Biden traveled to Spain this weekend; pledges US support to end Europe’s financial crisis. “We agreed on the importance of a resolute European action to strengthen the European economy and to build confidence in the markets,” Biden said. “And I conveyed the support of the United States of America toward those efforts and was pleased to hear the efforts that were under way on the part of the president.”
  • Health Care – Sen Rockefeller is worried that health care firms are “gaming” the recently passed HC reform legislation Politico.
  • Obama & the US$ - Obama said if the United States has a strong economy it will have a strong dollar, in rare comments about the U.S. currency – Reuters 
  • FHA asking lenders to do a better job policing mortgage brokers (WSJ)
  • Consumer borrowing for Mar – this hit late in trading on Fri - The Federal Reserve
    reported Friday that consumer borrowing rose by $1.95 billion in March, better than the $3.85 billion drop that economists had expected. AP
  • Dodd calls for action following Thurs’ plunge – Sen Dodd on Sun said that new "marketwide" circuit breakers were needed to prevent such a drop from happening again. He suggested the drop was driven in part by "high-frequency trading" and "very fancy computers that can move in microseconds." WSJ
  • “Market freefall may prompt new rules” – the NYT discusses how Thurs’ plunge is focusing regulator’s attention on the increasingly fragmented trading landscape and could usher in new rules. NYT
  • Senators Kaufman and Warner are looking to attach an amendment to the Dodd reform bill that would instruct the SEC and CFTC to explore trading reforms in the wake of last Thurs’ market plunge – Reuters
  • The SEC is considering “radical” new trading restrictions aimed at “slowing markets down”; trading in individual stocks could be halted if they move by a certain %; the SEC is considering whether to impose uniform trading curbs access markets for companies that have declined a certain %. London Telegraph/Bloomberg.
  • Climate change – Sen Graham said Friday that it has become "impossible" to pass climate and energy legislation at the moment, a declaration that likely dooms the bill's chance of passage this year – Washington Post.
  • Tea Party claims most significant political win yet – 3-term Sen. Robert F. Bennett was defeated at the Utah Republican Party's nominating convention due to opposition from Tea Party members; “National tea party organizers embraced the victory as a major first step toward returning the Republican Party to its conservative foundations of limited government and low taxes” Washington Post. content/article/2010/05/08/AR2010050803430.html?nav=rss_email/components
  • Obama to nominate Solicitor General Elana Kagan to the Supreme Court; her nomination will be unveiled Monday (WSJ)
  • Real estate will continue to act as a brake on economic growth rather than an accelerant
    (WSJ) · States are cutting back on tax incentives that were intended to lure businesses and create jobs; states are looking to save cash amid budget pressures (WSJ)

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