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Wednesday, June 17, 2009

Great Recession Roundup — June 17, 2009

Items of Interest:

Obama Administration proposes major new financial-regulatory reformWhiteHouse.gov:
New Foundation, New Stability -- Over the past decades, government has often haphazardly weakened and jettisoned the regulations on the financial sector that were designed to bring stability to the economy. The result has been what the President refers to as a "bubble and bust" economy, leaving American families at the whim of greed and excess far beyond their control and hundreds of miles away. As the President said today, it is indisputable that this peril was a leading contributor the economic breakdown America has seen over the past years.

Today marked a culmination of a months-long process in which the President consulted with the most expert and experienced regulators, leaders in Congress, and his entire economic team to craft a revamping of the system, a "new foundation" on which our economy can grow for decades to come. Many of them joined him today as he announced the principles they had agreed upon...

McClatchy Washington Bureau:
In huge change, Obama'd strip Fed of credit card oversight — Among the sweeping changes in government regulation that President Barack Obama will propose Wednesday is the creation of an independent and powerful Consumer Financial Product Safety Commission to regulate financial products such as mortgages and credit cards.

With an eye toward protecting consumers and ordinary investors, the Federal Reserve and other bank regulators would lose their oversight over mortgages, credit cards and other financial products that are sold to consumers. It's a radical shift in approach and a tacit acknowledgment of federal failure…
Felix Salmon: Financial regulation: The alphabet soup gets much worse
Dakinikat / The Confluence: The Devil in the Details
Dan Froomkin / White House Watch: Obama's New Road Rules May Fall Short

B. Applebaum & D. Cho / Washington Post:
Obama Blueprint Deepens Federal Role in Markets — The Obama administration last night detailed a series of proposals to involve the government more deeply in private markets, from helping to steer borrowers into affordable mortgage loans to imposing new limits on the largest financial companies, in a sweeping effort to curb the kinds of reckless risk-taking that sparked the economic crisis...

Felix Salmon / Economics Roundtable:
Where will effective bank regulation come from?

WSJ: Economists React: Regulatory Overhaul, Sensible or Burdensome?
SmartMoney: New Rules of Regulation: Their Impact on You

Joe Nocera / NY Times:
Talking Business: Only a Hint of Roosevelt in Financial Overhaul— and its overall effect on Wall Street’s modus operandi — is not even close to what President Franklin Roosevelt accomplished during the Depression...

Ron Insana / TheStreet.com:
The Federal Reserve Must Not Be Politicized -- If the 85-page White House proposal is enacted as is, the Fed would need the approval of the U.S. Treasury to take emergency steps during financial crises, effectively politicizing the Federal Reserve and making it an arm of the White House policy apparatus...
Transcript of Obama’s Interview With the Journal — A transcript of The Journal’s interview with President Obama, which touches on financial-regulatory reform, the power of free markets, health care and Bernanke’s future at the Fed...
EconLog: What's Wrong with the Financial Regulation White Paper, by Arnold Kling
Cafe Hayek / Economics Roundtable: Whose fault?
Paul Krugman / NY Times:
Is skin in the game the answer? -- According to the Washington Post, one part of the soon-to-be-announced financial regulatory reform will be a requirement that lenders keep some “skin in the game”...
Wall Street Journal:
Obama Aspires to a 'Light Touch,' Not a Heavy Hand -- As he prepares to release the most extensive proposals to change financial regulations since the 1930s, President Barack Obama is a bit anxious.

Anxious, that is, for people -- and specifically for his conservative critics -- to know he isn't the heavy-handed meddler some suspect.

"I think the irony … is that I actually would like to see a relatively light touch when it comes to the government," he said Tuesday in a White House interview...
Barack Obama: ...I would actually like to see a relatively light touch when it comes to government.discussion:
Bosch Fawstin / Big Hollywood: “Light Touch” — Inspired by an article in today's Wall Street Journal. -- "... I actually would like to see a relatively light touch when it comes to government" -- Barack Obama

Washington Wire: Transcript of Obama's Interview With the Journal
Mike / Cold Fury: Incredible
Graham Bowley / NY Times:
Stalking a Weaker Wall Street -- Wall Street’s great investment houses have never faced a serious foreign challenge in their own backyard. But as tectonic shifts reverberate through the banking industry, their overseas rivals are edging into some of the most lucrative corners of American finance.

The Swiss, Germans, British and Japanese are grabbing business from once-swaggering American banks by taking companies public, underwriting new bonds and advising corporations on mergers and acquisitions. And they are hiring more of their rivals’ bankers and traders to continue their winning streak...
Matthew Wurtzel / Dealscape: The Times revives competitiveness debate
Counterfeit or genuine?

$134 Billion worth of US Bonds found in suitcase. Counterfeit or not?$134 Billion in Bonds = almost 1% of US annual Gross National Product (GNP)

William Pesek / Bloomberg:
Suitcase With $134 Billion Puts Dollar on Edge - It’s a plot better suited for a John Le Carre novel.

Two Japanese men are detained in Italy after allegedly attempting to take $134 billion worth of U.S. bonds over the border into Switzerland. Details are maddeningly sketchy, so naturally the global rumor mill is kicking into high gear.

Are these would-be smugglers agents of Kim Jong Il stashing North Korea’s cash in a Swiss vault? Bagmen for Nigerian Internet scammers? Was the money meant for terrorists looking to buy nuclear warheads? Is Japan dumping its dollars secretly? Are the bonds real or counterfeit?

The implications of the securities being legitimate would be bigger than investors may realize. At a minimum, it would suggest that the U.S. risks losing control over its monetary supply on a massive scale...
Inner Workings: $134 billion in smuggled bonds almost surely a scam
Daily Kos: Who Was Smuggling $134billion in US Bonds to Switzerland?
Minyanville: The Horror of $134 Billion
Amazon.com Sales Rank: #59 in Books:
Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia