Friday, May 21, 2010

Washington; Barney Frank now in the role of defending Wall St; Geithner to travel through Europe next week $SPY , Fed’s Tarullo

· Financial regulatory reform legislation passed – this was widely expected after cloture (cloture needed 60 while final senate vote needed only 50) – the bill passed the full senate in a vote Thurs night 59-39 (nearly the same 60-40 split as the cloture vote that took place late in trading on Thurs); the next big process to take place w/will conferencing reconciliation w/the House.  WSJ 
· Fin reg reform – this WSJ run-down gives a recap of the bill’s major provisions.  WSJ    
· Barney Frank now in the role of defending Wall St; seeks to weaken Dodd bill during conference process (per Reuters article) – Frank says there are some important differences between his bill and what Dodd just produced and that he will insist be resolved more inline w/what  the House passed.  Frank said the House bill does not bar banks or their parent holding companies from doing "customer-driven trading in any financial instrument such as trading associated with asset management."  Nor, he said, does the House bill bar banks, their parents or affiliates from "limited fund sponsorship and investment to meet the needs of their clients as part of traditional asset management activity”.  All in all though, Frank says this “won’t be a hard bill to conference” and says differences around swaps trading (the “Lincoln Language”) in the Dodd bill, are more technical than philosophical.  Reuters/Politico 
· Fed’s Tarullo on Thurs stated that there were no additional actions being considered at the Fed re Europe or Greece (beyond the swap lines already opened); re those swap lines, it doesn’t seem like they are really doing much since there are few signs of a dollar shortage in Europe….LIBOR is moving up in all denominations…..numbers out right after the close Thurs reveal there was $0 drawn through the NY Fed swaps in the week of 5/19s (see link for NY Fed swap line weekly update:
· Fed governor Tarullo testified before the House Thurs on the situation in Europe – this is the first time a Fed official has responded to the events occurring across the Atlantic.  Nothing too groundbreaking – says the US can’t do much to help Europe solve this crisis; notes that a steep downturn in European growth would impact the US recovery; says US banks don’t have a ton of exposure to European peripheral sovereign debt.
· Geithner to travel through Europe next week following the Beijing strategic talks; he will meet on Wed in the UK w/officials and then travel to Wed for a meeting w/Trichet; on Thurs he is due to meet w/German officials – WSJ
· Sweeping new changes could be implemented for the offshore drilling industry in the wake of the Deepwater Horizon disaster – WSJ   
· Health Care – a lot of companies may soon discover that it would be cheaper not to provide health insurance to their employees; paying the fines to Washington may be a cheaper option – WSJ
· Paul Krugman warns of a “lost decade” in the US – says the US isn’t like Greece but it is looking increasingly like Japan.  NYT
· NYT details the NY State public pension crisis;

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