Maybe banks needn’t overly fear new U.S. watchdog 16 Apr 2012 Crass resistance to the Consumer Financial Protection Bureau looks even more overblown following one of its first big proposals. The agency will crack down on deceptive practices on riskier loans but is OK with banks charging fees for them. That strikes a reasonable balance.
World Bank wackiness explains odd U.S. choice 9 Apr 2012 If the competition for the World Bank’s presidency were a normal process, Jim Kim wouldn’t stand a chance. But geopolitics and the bank’s mandate explain why the doctor who couldn’t stop Dartmouth frat boys from consuming “vomelets” may actually be an inspired choice.
D.C. holds $23 bln fix for cash-strapped states 4 Apr 2012 That’s how much they could raise from taxing online retailers. A pre-Internet ruling currently forbids such tariffs, forcing states like Georgia to resort to contorted ways around it. A federal solution is needed. Luckily, Congress may have hit on one that even Amazon supports.
U.S. lawmakers talk discipline but still love pork 2 Apr 2012 A gridlocked Congress is rethinking its ban on earmarks. Bringing back this form of wasteful spending might grease the wheels of compromise. But it would also show that fiscal responsibility is a Washington mirage - until market forces make austerity the only option.
New financial watchdogs won’t thrill Wall Street 30 Mar 2012 Congress has finally given the nod to some of President Obama’s appointees to the FDIC and OCC. None of the fresh faces is likely to rock the boat much. But one of the banks’ stronger supporters is now gone and the new guard has little reason to push back against Dodd-Frank.
U.S. energy debate has little to do with economics 27 Mar 2012 President Obama’s call to end big oil’s tax credits is mere political theater. Another $4 bln in tariffs for the industry won’t cure the deficit - and these firms do pay a fair whack already. But the counterargument that scrapping them will drive up gas prices is just as dubious.
California advances on golden goose with machete 27 Mar 2012 Governor Brown is proposing the highest state taxes in the nation to plug a looming budget gap - a shortfall caused mostly by increased spending. The tax hike may work on paper, but if it prompts an exodus of footloose millionaires, Brown may end up with egg on his face.
Volcker Rule remedy a decent compromise 26 Mar 2012 A bipartisan group of lawmakers wants to give regulators more time to figure out the complexities of banning prop trading. Their genuinely practical one-page fix is a rare treat from chambers famous for partisan bickering - assuming the senators can get it passed.
Top U.S. judges may drown out healthcare debate 23 Mar 2012 The most verbose Supreme Court on record will next week hear a hefty three days of oral argument on President Obama’s landmark reform. If past patterns hold, the justices will spend more time testing each other than listening to lawyers. It’s the legal system at its hammiest.
Obama doesn’t even name banker to run World Bank 23 Mar 2012 Nor is Jim Yong Kim a seasoned diplomat. He’s a disease fighter and president of Dartmouth, where his tenure was marked by budget struggles. Kim’s medical background and Korean birth may mollify critics of America’s monopoly on the top job. But he’s got his work cut out for him.
Bank bailout views skewer GOP star’s credibility 23 Mar 2012 Paul Ryan’s new budget takes bold steps to shrink U.S. debt, but makes a troubling error. He suggests that Dodd-Frank’s new mechanism to wind down big banks will cost taxpayers and spur bailouts. This misstep casts doubt on his ability to favor practical solutions over politics.
World Bank pick may give Obama rare political lift 22 Mar 2012 Choosing a new leader for the global multilateral lending agency normally doesn’t enter into the math of a U.S. election. But putting the first woman in charge could further cement Obama’s lead with the vital female electorate. What’s more, he’s spoiled for good candidates.
Fully-stocked Fed board needed to navigate exit 21 Mar 2012 The White House’s bipartisan duo Jeremy Stein and Jerome Powell could bring the central bank’s board back to full strength in time for what may be a rocky withdrawal from easy monetary policy. The candidates are strong - whether the Senate will also be remains to be seen.
Improving U.S. jobs trend favors old over young 9 Mar 2012 A solid 227,000 jobs were added in February, with upward revisions for past months. In the last five years, people aged 55 and over have gained 3.6 mln jobs, while younger workers have lost 7.6 mln. The incentives of shrunken savings and funny money are doubly harming the young.
Brazil is falling short of its BRIC status 8 Mar 2012 Its 2011 GDP growth of 2.7 pct suggests it’s no longer a real emerging market. The government is largely to blame. Populist mandates have bloated state spending while restrictions and meddling have increased risk. Maybe investors should downgrade Brazil from BRIC to brick.
Republican hopefuls rely on faith in economics too 7 Mar 2012 Romtorumgrich promise tax cuts while simultaneously shrinking the U.S. deficit. Economists criticize their math, which doesn’t add up. The candidates say that critics aren’t accounting for stronger growth from lower taxes, or “dynamic scoring.” Neither should voters.
Corporate political donors don’t need SEC policing 2 Mar 2012 As election spending soars, the watchdog faces pressure to make firms disclose their campaign contribution largess. Some already do, thanks to shareholder proposals. A broad rule would be an unnecessary venture into politics and stretches the idea of investor protection.
Don’t penalize money funds for the sins of banks 1 Mar 2012 The SEC wants to step up regulation of money market funds. But their losses have been relatively trivial and mostly non-systemic, while providing savers with diversification from insured deposits. A better idea would be to clearly delineate their risks from those of banks.
Fed’s mortgage sales tighten Volckerian knots 29 Feb 2012 The central bank offloaded the last $6 bln of housing dreck from the AIG rescue. The deals can be construed as prop trading, but also show how big banks work well as market-makers. Maiden Lane exemplifies the conundrum confronting regulators as they draft the final Volcker Rule.
Markets should get used to Washington dysfunction 29 Feb 2012 The U.S. capital endured snowmageddon last winter, but Snowemaggedon could prove worse. Olympia Snowe’s retirement messes up the math for a GOP Capitol coup. Though the private sector often thrives on gridlock, the prospect of recent behavior continuing may change the sentiment.