Global Articles on what is going on...posted daily

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Thursday, June 3, 2010

BofA remains largest U.S. bank


Bank of America Corp. remained the largest U.S. bank in the nation at the end of the first quarter based on assets and deposits, according to a survey by SNL Financial. Charlotte-based BofA, which had total assets of $2.32 trillion and deposits of $959 billion at the end of the quarter, also ranked first in the fourth quarter.

Wells Fargo & Co. (NYSE:WFC), parent of Wachovia Bank of Charlotte, stood at No. 4, with assets of $1.22 trillion and deposits of $804.9 billion. The San Francisco-based bank ranked also fourth at the end of the previous quarter.

Winston-Salem-based BB&T Corp. (NYSE:BB&T), at No. 11 in December, slipped to 12th in the first quarter with total assets of $163.7 billion and deposits of $113.7 billion.

Fifth Third Bancorp (NASDAQ:FITB) of Cincinnati, parent of the former First Charter Corp. of Charlotte, moved up one spot to No. 16, with assets of $112.7 billion and deposits of $83.6 billion.

Raleigh-based First Citizens BancShares Inc., which has been acquiring troubled banks on both coasts in recent months, moved up to No. 44 on the list. First Citizens (NASDAQ: FCNCA), with total assets of $21.2 billion and deposits of $17.8 billion, wasn’t AMONG the top 50 in the fourth quarter.

Raleigh-based RBC BanCorp., the U.S. banking arm of Royal Bank of Canada (NYSE:RBC), ranked 39th in both quarters. RBC Bank had total assets of $26.2 billion and deposits of $19.5 billion.

New York-based JPMorgan Chase & Co. (NYSE:JPM) ranked second on the list, with assets of nearly $2.2 trillion and deposits of $925.2 billion. Citigroup Inc. (NYSE:C), also of New York, was third with assets of $2 trillion and deposits of $827.9 billion.

www.bizjournals.com/charlotte/stories/2010/05/31/daily24.html

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Monday, June 07, 2010
3rd UPDATE: Countrywide's Mess Billed To Bank of America
By Shayndi Raice and Marshall Eckblad

Dow Jones Newswires
WASHINGTON -(Dow Jones)- The reign was Angelo Mozilo's. But the fall-out belongs to Bank of America Corp. (BAC)
The Charlotte bank agreed Monday to pay the government about $108 million to settle claims that its Countrywide unit bilked mortgage customers with artificially inflated fees. But Bank of America didn't own Countrywide when the alleged mistreatment occurred.

The agreement illustrates the latest chapter in the long-running legal liabilities that Bank of America assumed when it purchased Countrywide, a troubled competitor led by controversial former CEO Angelo Mozilo, during the financial crisis in 2008. Although the deal carried a small price tag--some $2.5 billion for what was then the nation's largest mortgage lender--Bank of America has faced a clean-up job that's about to enter its third year.

Monday's agreement is the second Countrywide-related settlement that Bank of America has signed in as many months. In May, the nation's largest bank by assets agreed to pay $600 million to six New York retirement funds over claims that Countrywide didn't properly disclose the riskiness of its lending activities. In Monday's settlement, the Federal Trade Commission claims Countrywide carried out a fee-assessment scheme to overcharge customers who were at risk of foreclosure.

"Our commitment to transparency and fair and responsible customer treatment is carried through in provisions of the settlement with the FTC," Bank of America said in a statement.

In both cases, spokespeople for Bank of America said the company is settling the claims now in order to avoid higher litigation costs. The bank didn't admit any wrongdoing by Countrywide in either case.

According to the bank's latest quarterly regulatory filing, it faces three outstanding lawsuits that name Countrywide as a defendant; it's not clear whether those suits will succeed.

Bank of America acquired Countrywide, once the nation's largest mortgage lender, for about $2.5 billion in July 2008, mere months before it also purchased Merrill Lynch & Co. as that financial firm teetered toward failure.

The settlement with the Federal Trade Commission is one of the largest judgments imposed in an agency case, Federal Trade Commission Chairman Jon Leibowitz said. The settlement funds will be used to reimburse 200,000 Countrywide customers who were allegedly overcharged before it was acquired by Bank of America in July 2008. As part of the settlement, the company didn't admit or deny the allegations.

The FTC alleged that Countrywide made risky loans to homeowners during the boom years, and profited when the loans failed by overcharging clients on default-related services when they fell behind on their loans.

According to the complaint, Countrywide created affiliated companies that charged a large markup in fees, sometimes up to 100% or more for services like property inspections and lawn mowing services. Countrywide also made inaccurate claims about the amounts borrowers owed in bankruptcy cases.

"Countrywide took advantage of homeowners in two utterly unprincipled ways," Leibowitz said.

Leibowitz said the commission can contact every affected customer, adding, "We want to get this money to consumers as quickly as possible." The $108 million charge is an estimate of the money owed to former Countrywide clients, but until the settlement is finalized, the FTC will not be able to identify specific victims and refund them their money.

The FTC said the Countrywide settlement demonstrates the need for expanded agency powers that are contained in financial industry legislation pending in Congress.

Before being acquired by Bank of America, Countrywide was ranked as the top mortgage servicer in the country, with a balance of more than $1.4 trillion in its servicing portfolio.

Copyright © 2009 Dow Jones Newswires

www.foxbusiness.com/story/markets/industries/finance/rd-update-countrywides-mess-billed-bank-america/


ty nalmann

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From the July - August 2010 issue:

The Wall Street ICEcapade

Lucy Komisar

As the U.S. Senate recently debated a major financial reform bill in which the credit default swap, a kind of derivative, played a significant part, Senators Carl Levin (D-MI) and Jeff Merkley (D-OR) proposed an amendment to that bill that would have banned banks from proprietary trading. There were a lot of high-rolling bankers who did not want that amendment to pass, because it would have messed up their plans to repatriate foreign profits into the United States, untaxed, by trading in derivatives on their own accounts. The clearinghouse ICE Trust U.S. forms a central part of these plans.

What is ICE Trust U.S., and who owns it? ICE US Holding Co., which was established in 2008 as the parent of ICE Trust U.S., is located in the Cayman Islands. Yet none of the owners of ICE US Holding Co. are based in the Caymans. IntercontinentalExchange, Inc., which owns 50 percent of ICE US Holding, is headquartered in Atlanta, Georgia. Among the other owners of the Caymans company are Citigroup, Goldman Sachs, J.P. Morgan, Merrill Lynch and Morgan Stanley, which are headquartered in New York. Bank of America, which now owns Merrill Lynch, is based in Charlotte, North Carolina. Deutsche Bank (Frankfurt) and both UBS and Credit Suisse (Zurich) are also part owners.

Derivatives lie close to the heart of the debate over financial reform, yet no one appears to have examined the ICE exchange, whose ownership means it will be the world’s main credit default swap clearinghouse; nor has anyone explained how its ownership structure might enrich the banks who own ICE US Holding Co. at the expense of U.S. taxpayers. This is what I propose to do here.


ICE Trust U.S. was created in anticipation of tougher U.S. laws that will force the trading of derivatives into clearinghouses in which prices are made public and the losses of one member are shared with others. The Obama Administration proposed this measure last year, explaining it as a form of self-insurance designed to reduce the odds of another financial company bailout by U.S. taxpayers. The Administration had good reason to focus on derivatives, which are securities based on the value of other securities. They account for $600 trillion in investment worldwide and include everything from futures and options to complex, one-of-a-kind contracts. ICE focuses on the market for credit default swaps, a form of insurance that protects investors against defaults in the bond market. ICE’s member banks account for about 90 percent of the credit default swap market and are thus in position to steer business to ICE and help it capture a leading market share.

Given the nature of its business, there’s no obvious reason why ICE has to be owned by a company outside of the United States. Its fledgling rival, a clearinghouse operated by the Chicago Mercantile Exchange, is based in the United States and has no foreign parent. So why is ICE’s parent located in the Cayman Islands? Jonathan Short, chief counsel of IntercontinentalExchange Inc., declined to answer this question on the record, but some experts have offered a very plausible explanation. To understand the experts’ explanation, however, we first need to know a little tax history.

Before the 1960s, it had been a long-standing rule that U.S. company profits earned abroad are not taxed until they are repatriated. Even before repatriation, however, U.S. corporations could reap economic benefit from foreign subsidiaries’ earnings by making them available to the U.S. parent company as investments, loans or guarantees. The Kennedy Administration and Congress tried to put an end to this practice, having decided that such practices were in substance little different from the parent company’s receipt of a dividend. In 1962, Congress enacted Section 956 of the tax code, which said that not just profits but any company funds moved to the United States, including loans, would be taxed.

Clearinghouses such as ICE Trust U.S., which move large sums of money around the world, can run afoul of Section 956 because they collect security deposits, known as margin, from their clients, which tax authorities view as a form of loan. These “loans” can be taxable, depending upon who is doing the trading, where they are trading from and who owns the exchange. For example, some of the banks using the services of ICE Trust U.S. are its U.S. broker-dealer owners doing business through foreign subsidiaries. They include Bank of America/Merrill Lynch, Citigroup, Goldman Sachs, J.P. Morgan and Morgan Stanley. If they use ICE Trust U.S. to buy American credit default swap products, they must deposit money with the clearinghouse as collateral, or margin. If their foreign subsidiaries make the trades for clients, the margin isn’t subject to U.S. taxes. But if the banks’ foreign subsidiaries use ICE Trust U.S. to trade credit default swaps for themselves, called “proprietary trading”, the margin they put in ICE Trust U.S. falls under Section 956. Since those banks are part owners of ICE Trust U.S., this is deemed transferring money from the subsidiary to the parent in the United States, and it is taxable. This is why it might help to have a pass-through in the Cayman Islands. As a source close to ICE explained:


The only reason a Cayman entity was formed was to have a foreign entity in the chain of ownership. The problem that some of the clearing participants had with this and with our clearing offering was the application of that section of the Internal Revenue code to payments that would be made from their CDS foreign clearing operations through the clearinghouse for marketing purposes and the potential taxation of those payments under Section 956. They were concerned that, because they would have a profit-sharing interest in this U.S. clearinghouse, that it could fall within 956. So the decision was made, ‘Let’s interpose a foreign entity in the structure.’ That way it will fall clearly outside 956. There will be no risk that it could ever apply, and everyone was happy with the structuring.

David Howard, a lawyer and certified public accountant with the Silicon Valley law firm Hoge Fenton, explained further that ICE US Holding Company L.P., Cayman Islands, which owns ICE Trust U.S., is “a blocking company” used to prevent the foreign subsidiary from being deemed as loaning margin to a “U.S. person” (namely, ICE Trust U.S.). “They are loaning the money to a Cayman Islands person”, he said. This means that banks can keep their profits abroad and untaxed, but still use them to trade on a U.S. exchange, making investments in U.S. credit default swaps while not paying tax on the collateral placed on the exchange. It’s precisely what Section 956 was designed to prevent.

Tax experts say ICE Trust U.S. and its owners benefit from the fact that the IRS and other regulators have very different ways of looking at the map. The Caymans offshore structure is legal: Both the New York Federal Reserve Bank and the New York Banking Department approved it. New York Fed spokesman David Girardin declined to comment. New York Banking Department spokeswoman Glorimar Perez-Gonzalez told me, “We satisfied ourselves that the holding company structure is not being used to evade U.S. taxes. We have no further comment on the matter.” The IRS declined comment as well. The parent ICE holding company duly reported the Caymans company to the Securities and Exchange Commission, as required by law, in March 2009. The Securities and Exchange Commission (SEC) declined to discuss the matter. A spokesman merely told me that the agency does not approve or disapprove of the use of offshore structures; it just requires that owners disclose their existence.

This bifurcation of views and responsibilities is the problem, explains Adam Rosenzweig, associate professor of tax law and policy at the Washington University Law School in St. Louis. Rosenzweig, who specialized in Federal tax law relating to private equity, hedge funds, equity derivatives and cross-border capital markets before moving to academia, put it this way:


The SEC and Federal Reserve are treating ICE Trust U.S. as the place the action is going on. The tax law looks at ICE Trust U.S. and says all the action is happening at the holding company level in the Caymans. They are exploiting the benefit of being in the United States for regulatory purposes and being a foreign entity in the Caymans for tax purposes.

Some ICE Trust U.S. owner banks deny that they are currently using foreign subsidiaries to move money into the United States untaxed. Citigroup spokesperson Molly Meiners said, “The potential tax issue is not relevant to Citigroup. Citi deals with ICE Trust only through U.S. vehicles and pays all applicable taxes under U.S. code.” Scott Silvestri, speaking for Bank of America and Merrill Lynch, said, “The ICE structure is not being used to bring profits back to the United States untaxed.” J.P. Morgan’s Justin G. Perras said, “JPM receives no beneficial tax treatment from its relationship with ICE Trust. Any implication otherwise is patently false.” (The other U.S. owner banks, Goldman Sachs and Morgan Stanley, declined to comment.) However, the Caymans structure is difficult to fathom unless some of the owner banks want to move money to the exchange from foreign subsidiaries and dodge U.S. tax on those repatriated profits.

It is worth noting that many of these banks’ subsidiaries are located in offshore locations where they pay no local taxes, so they would not benefit from treaties made to avoid double taxation; repatriated profits would be taxed in full. Goldman lists only 31 offshore subsidiaries in its SEC filing, though it acknowledges that it “aggregates” individual companies in its reporting. The subsidiaries include Amagansett Funding Ltd. in the Caymans and MLT investments in Mauritius. Morgan Stanley lists 321 offshore subsidiaries, including Morgan Stanley Berkshire Investments in Jersey and Morgan Stanley Morane Investments in Luxembourg. The other banks also have hundreds of offshore subsidiaries. Profits from these untaxed subsidiaries need to be invested, and the banks would prefer it to be done in ways that avoid taxation. Buying credit default swaps on ICE Trust U.S. allows the banks to do that.


Just how much money could skirt Section 956 via the ICE Caymans structure? Peter Vinella, managing director of the consulting firm LECG, says there is no way to know the number or value of trades being done through the U.S. banks’ foreign subsidiaries because the figures aren’t reported. “It’s not transparent; there’s no U.S.-owned market”, said Vinella, who ran a global derivatives business as CEO of Wilmington Trust Conduit Services.

ICE Trust would not disclose the volume of margin payments it receives from foreign subsidiaries of U.S. banks. Vinella says margin requirements range from 5 percent of the contract for high-quality counterparties with standard structures to 15 percent for lower quality counterparties. Typical credit analyses, which include corporate family rating, financials, industry sector, country and news stories used to compute the probability of default, drive most judgments. “Most margins are around 7 percent, because most people do standard derivatives”, he said.

“It’s difficult to get real numbers on what is involved”, agrees Michael Greenberger, former director of trading and markets at the Commodity Futures Trading Commission and current teacher at the University of Maryland School of Law. He asks, “What would be the amounts owed if tax obligations were triggered? The whole market is deregulated or offshore. Reporting is very bad. That doesn’t mean the IRS can’t figure out amounts owed. But for a member of the public, trying to get information is very sketchy.”

At the moment, ICE Trust U.S. is pretty small. During the nine months between March and December 2009, ICE Trust says it cleared more than $3.1 trillion face value of North American credit default swap contracts and collected $30 million in fees. But if Congress requires credit default swap trades to be conducted in a clearinghouse, the big banks that co-own ICE Trust U.S. have a ready-made vehicle to capture a share of what is expected to be a $26-trillion market. Greenberger said the numbers then could eventually be quite significant: “If the taxes (on that margin) are going to be collected, the income stream to the IRS is going to be phenomenal. This would be well worth the IRS’s time to get on top of.”

University of Michigan Law School professor Reuven Avi-Yonah, who frequently testifies as an expert witness on tax issues in congressional hearings, said the ICE structure ought to be examined by the public, even if it is legal. “Not only do we have an entity in a tax haven, but it’s also an entity with no substance, which is really a killer combination.” A former corporate lawyer, Avi-Yonah told me, “I am not sure the IRS would reject it, but that doesn’t mean it’s okay; Congress should take a look.”

Congress may do just that. Rep. Lloyd Doggett (D-TX), a long-time veteran of the fight against corporate tax evasion, had this to say about the ICE structure: “Too many multinational corporations obscure their tax avoidance activities through complicated offshore tax structures. Where the legitimate purpose is not clear, these structures deserve greater scrutiny.” His office has passed on documentation about ICE to the Congressional Joint Committee on Taxation. Staff of the Senate Finance, Banking and Agriculture Committees, and the House Financial Services and Ways and Means Committees, as well as leading members of Congress who deal with derivatives and tax issues, were unaware of the ICE US Holding Company structure and declined to comment on the matter.

Nevertheless, the legislative wheels are grinding. Legislation passed by the House and Senate would require most or all traders for credit default swaps and other derivatives to use an exchange.

But another major reform—the “Volcker Rule” to ban banks trading on their own accounts—appears blocked. As this article goes to press, it is likely that a House-Senate conference committee will agree to sections in both bills to ban proprietary trades in derivatives by the big banks only if the financial regulators decide to do so. The “Volcker Rule”, proposed by former Federal Reserve Chair Paul Volcker and endorsed by President Obama, would have banned such trading. Under the House bill, the rules would be written jointly by the primary regulators of banks and bank holding companies—not likely to be tough on the banks. The House left it up to the regulators’ discretion, based on a particular company’s overall risk portfolio.

The Senate language is almost as ineffectual. The Senate’s bill tells the regulators to “study” limiting high-risk speculation by the big banks with their own capital in derivatives and other securities and would follow the regulators’ recommendations. But the decision would still be up to a council of “systemic risk” regulators, among them the chairs of the Federal Reserve and Federal Deposit Insurance Corporation, the Treasury Secretary and the Comptroller of Currency.

An amendment filed by Senators Carl Levin and Merkley would make a proprietary trading ban law for banks that have Federal Deposit Insurance Corporation (FDIC) guarantees. Republicans prevented it from being considered. As I write, Levin and Merkley are still pressing for its adoption by the conferees.

Ironically, a staffer involved in the legislation said the final bill could be less effective than existing rules. They allow bank regulators to restrict proprietary trading if they think it is a threat to the safety and soundness of a particular banking institution, no “study” or high-level approvals required.

If the legislation passes without the Levin-Merkley ban on proprietary trading, ICE Trust U.S., with its Caymans parent company, is positioned to help the major American banks use their foreign profits to do U.S. credit default swap trades in a $26-trillion market while dodging millions of dollars in taxation—a nifty double axel. Let’s hope Congress becomes aware of this scam and keeps U.S. taxpayers from getting iced by yet another banker’s “arrangement.”

the-american-interest.com/article.cfm?piece=826

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Judicial Watch Announces List of Washington's "Ten Most Wanted Corrupt Politicians" for 2009
ViewDiscussion.Contact Information:
Press Office 202-646-5172, ext 305

Washington, DC
Judicial Watch, the public interest group that investigates and prosecutes government corruption, today released its 2009 list of Washington's "Ten Most Wanted Corrupt Politicians." The list, in alphabetical order, includes:

1.Senator Christopher Dodd (D-CT): This marks two years in a row for Senator Dodd, who made the 2008 "Ten Most Corrupt" list for his corrupt relationship with Fannie Mae and Freddie Mac and for accepting preferential treatment and loan terms from Countrywide Financial, a scandal which still dogs him. In 2009, the scandals kept coming for the Connecticut Democrat. In 2009, Judicial Watch filed a Senate ethics complaint against Dodd for undervaluing a property he owns in Ireland on his Senate Financial Disclosure forms. Judicial Watch's complaint forced Dodd to amend the forms. However, press reports suggest the property to this day remains undervalued. Judicial Watch also alleges in the complaint that Dodd obtained a sweetheart deal for the property in exchange for his assistance in obtaining a presidential pardon (during the Clinton administration) and other favors for a long-time friend and business associate. The false financial disclosure forms were part of the cover-up. Dodd remains the head the Senate Banking Committee.

2.Senator John Ensign (R-NV): A number of scandals popped up in 2009 involving public officials who conducted illicit affairs, and then attempted to cover them up with hush payments and favors, an obvious abuse of power. The year's worst offender might just be Nevada Republican Senator John Ensign. Ensign admitted in June to an extramarital affair with the wife of one of his staff members, who then allegedly obtained special favors from the Nevada Republican in exchange for his silence. According to The New York Times: "The Justice Department and the Senate Ethics Committee are expected to conduct preliminary inquiries into whether Senator John Ensign violated federal law or ethics rules as part of an effort to conceal an affair with the wife of an aide…" The former staffer, Douglas Hampton, began to lobby Mr. Ensign's office immediately upon leaving his congressional job, despite the fact that he was subject to a one-year lobbying ban. Ensign seems to have ignored the law and allowed Hampton lobbying access to his office as a payment for his silence about the affair. (These are potentially criminal offenses.) It looks as if Ensign misused his public office (and taxpayer resources) to cover up his sexual shenanigans.

3.Rep. Barney Frank (D-MA): Judicial Watch is investigating a $12 million TARP cash injection provided to the Boston-based OneUnited Bank at the urging of Massachusetts Rep. Barney Frank. As reported in the January 22, 2009, edition of the Wall Street Journal, the Treasury Department indicated it would only provide funds to healthy banks to jump-start lending. Not only was OneUnited Bank in massive financial turmoil, but it was also "under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use." Rep. Frank admitted he spoke to a "federal regulator," and Treasury granted the funds. (The bank continues to flounder despite Frank's intervention for federal dollars.) Moreover, Judicial Watch uncovered documents in 2009 that showed that members of Congress for years were aware that Fannie Mae and Freddie Mac were playing fast and loose with accounting issues, risk assessment issues and executive compensation issues, even as liberals led by Rep. Frank continued to block attempts to rein in the two Government Sponsored Enterprises (GSEs). For example, during a hearing on September 10, 2003, before the House Committee on Financial Services considering a Bush administration proposal to further regulate Fannie and Freddie, Rep. Frank stated: "I want to begin by saying that I am glad to consider the legislation, but I do not think we are facing any kind of a crisis. That is, in my view, the two Government Sponsored Enterprises we are talking about here, Fannie Mae and Freddie Mac, are not in a crisis. We have recently had an accounting problem with Freddie Mac that has led to people being dismissed, as appears to be appropriate. I do not think at this point there is a problem with a threat to the Treasury." Frank received $42,350 in campaign contributions from Fannie Mae and Freddie Mac between 1989 and 2008. Frank also engaged in a relationship with a Fannie Mae Executive while serving on the House Banking Committee, which has jurisdiction over Fannie Mae and Freddie Mac.

4.Secretary of Treasury Timothy Geithner: In 2009, Obama Treasury Secretary Timothy Geithner admitted that he failed to pay $34,000 in Social Security and Medicare taxes from 2001-2004 on his lucrative salary at the International Monetary Fund (IMF), an organization with 185 member countries that oversees the global financial system. (Did we mention Geithner now runs the IRS?) It wasn't until President Obama tapped Geithner to head the Treasury Department that he paid back most of the money, although the IRS kindly waived the hefty penalties. In March 2009, Geithner also came under fire for his handling of the AIG bonus scandal, where the company used $165 million of its bailout funds to pay out executive bonuses, resulting in a massive public backlash. Of course as head of the New York Federal Reserve, Geithner helped craft the AIG deal in September 2008. However, when the AIG scandal broke, Geithner claimed he knew nothing of the bonuses until March 10, 2009. The timing is important. According to CNN: "Although Treasury Secretary Timothy Geithner told congressional leaders on Tuesday that he learned of AIG's impending $160 million bonus payments to members of its troubled financial-products unit on March 10, sources tell TIME that the New York Federal Reserve informed Treasury staff that the payments were imminent on Feb. 28. That is ten days before Treasury staffers say they first learned 'full details' of the bonus plan, and three days before the [Obama] Administration launched a new $30 billion infusion of cash for AIG." Throw in another embarrassing disclosure in 2009 that Geithner employed "household help" ineligible to work in the United States, and it becomes clear why the Treasury Secretary has earned a spot on the "Ten Most Corrupt Politicians in Washington" list.

5.Attorney General Eric Holder: Tim Geithner can be sure he won't be hounded about his tax-dodging by his colleague Eric Holder, US Attorney General. Judicial Watch strongly opposed Holder because of his terrible ethics record, which includes: obstructing an FBI investigation of the theft of nuclear secrets from Los Alamos Nuclear Laboratory; rejecting multiple requests for an independent counsel to investigate alleged fundraising abuses by then-Vice President Al Gore in the Clinton White House; undermining the criminal investigation of President Clinton by Kenneth Starr in the midst of the Lewinsky investigation; and planning the violent raid to seize then-six-year-old Elian Gonzalez at gunpoint in order to return him to Castro's Cuba. Moreover, there is his soft record on terrorism. Holder bypassed Justice Department procedures to push through Bill Clinton's scandalous presidential pardons and commutations, including for 16 members of FALN, a violent Puerto Rican terrorist group that orchestrated approximately 120 bombings in the United States, killing at least six people and permanently maiming dozens of others, including law enforcement officers. His record in the current administration is no better. As he did during the Clinton administration, Holder continues to ignore serious incidents of corruption that could impact his political bosses at the White House. For example, Holder has refused to investigate charges that the Obama political machine traded VIP access to the White House in exchange for campaign contributions – a scheme eerily similar to one hatched by Holder's former boss, Bill Clinton in the 1990s. The Holder Justice Department also came under fire for dropping a voter intimidation case against the New Black Panther Party. On Election Day 2008, Black Panthers dressed in paramilitary garb threatened voters as they approached polling stations. Holder has also failed to initiate a comprehensive Justice investigation of the notorious organization ACORN (Association of Community Organizations for Reform Now), which is closely tied to President Obama. There were allegedly more than 400,000 fraudulent ACORN voter registrations in the 2008 campaign. And then there were the journalist videos catching ACORN Housing workers advising undercover reporters on how to evade tax, immigration, and child prostitution laws. Holder's controversial decisions on new rights for terrorists and his attacks on previous efforts to combat terrorism remind many of the fact that his former law firm has provided and continues to provide pro bono representation to terrorists at Guantanamo Bay. Holder's politicization of the Justice Department makes one long for the days of Alberto Gonzales.

6.Rep. Jesse Jackson, Jr. (D-IL)/ Senator Roland Burris (D-IL): One of the most serious scandals of 2009 involved a scheme by former Illinois Governor Rod Blagojevich to sell President Obama's then-vacant Senate seat to the highest bidder. Two men caught smack dab in the middle of the scandal: Senator Roland Burris, who ultimately got the job, and Rep. Jesse Jackson, Jr. According to the Chicago Sun-Times, emissaries for Jesse Jackson Jr., named "Senate Candidate A" in the Blagojevich indictment, reportedly offered $1.5 million to Blagojevich during a fundraiser if he named Jackson Jr. to Obama's seat. Three days later federal authorities arrested Blagojevich. Burris, for his part, apparently lied about his contacts with Blagojevich, who was arrested in December 2008 for trying to sell Obama's Senate seat. According to Reuters: "Roland Burris came under fresh scrutiny…after disclosing he tried to raise money for the disgraced former Illinois governor who named him to the U.S. Senate seat once held by President Barack Obama…In the latest of those admissions, Burris said he looked into mounting a fundraiser for Rod Blagojevich -- later charged with trying to sell Obama's Senate seat -- at the same time he was expressing interest to the then-governor's aides about his desire to be appointed." Burris changed his story five times regarding his contacts with Blagojevich prior to the Illinois governor appointing him to the U.S. Senate. Three of those changing explanations came under oath.

7.President Barack Obama: During his presidential campaign, President Obama promised to run an ethical and transparent administration. However, in his first year in office, the President has delivered corruption and secrecy, bringing Chicago-style political corruption to the White House. Consider just a few Obama administration "lowlights" from year one: Even before President Obama was sworn into office, he was interviewed by the FBI for a criminal investigation of former Illinois Governor Rod Blagojevich's scheme to sell the President's former Senate seat to the highest bidder. (Obama's Chief of Staff Rahm Emanuel and slumlord Valerie Jarrett, both from Chicago, are also tangled up in the Blagojevich scandal.) Moreover, the Obama administration made the startling claim that the Privacy Act does not apply to the White House. The Obama White House believes it can violate the privacy rights of American citizens without any legal consequences or accountability. President Obama boldly proclaimed that "transparency and the rule of law will be the touchstones of this presidency," but his administration is addicted to secrecy, stonewalling far too many of Judicial Watch's Freedom of Information Act requests and is refusing to make public White House visitor logs as federal law requires. The Obama administration turned the National Endowment of the Arts (as well as the agency that runs the AmeriCorps program) into propaganda machines, using tax dollars to persuade "artists" to promote the Obama agenda. According to documents uncovered by Judicial Watch, the idea emerged as a direct result of the Obama campaign and enjoyed White House approval and participation. President Obama has installed a record number of "czars" in positions of power. Too many of these individuals are leftist radicals who answer to no one but the president. And too many of the czars are not subject to Senate confirmation (which raises serious constitutional questions). Under the President's bailout schemes, the federal government continues to appropriate or control — through fiat and threats — large sectors of the private economy, prompting conservative columnist George Will to write: "The administration's central activity — the political allocation of wealth and opportunity — is not merely susceptible to corruption, it is corruption." Government-run healthcare and car companies, White House coercion, uninvestigated ACORN corruption, debasing his office to help Chicago cronies, attacks on conservative media and the private sector, unprecedented and dangerous new rights for terrorists, perks for campaign donors — this is Obama's "ethics" record — and we haven't even gotten through the first year of his presidency.

8.Rep. Nancy Pelosi (D-CA): At the heart of the corruption problem in Washington is a sense of entitlement. Politicians believe laws and rules (even the U.S. Constitution) apply to the rest of us but not to them. Case in point: House Speaker Nancy Pelosi and her excessive and boorish demands for military travel. Judicial Watch obtained documents from the Pentagon in 2009 that suggest Pelosi has been treating the Air Force like her own personal airline. These documents, obtained through the Freedom of Information Act, include internal Pentagon email correspondence detailing attempts by Pentagon staff to accommodate Pelosi's numerous requests for military escorts and military aircraft as well as the speaker's 11th hour cancellations and changes. House Speaker Nancy Pelosi also came under fire in April 2009, when she claimed she was never briefed about the CIA's use of the waterboarding technique during terrorism investigations. The CIA produced a report documenting a briefing with Pelosi on September 4, 2002, that suggests otherwise. Judicial Watch also obtained documents, including a CIA Inspector General report, which further confirmed that Congress was fully briefed on the enhanced interrogation techniques. Aside from her own personal transgressions, Nancy Pelosi has ignored serious incidents of corruption within her own party, including many of the individuals on this list. (See Rangel, Murtha, Jesse Jackson, Jr., etc.)

9.Rep. John Murtha (D-PA) and the rest of the PMA Seven: Rep. John Murtha made headlines in 2009 for all the wrong reasons. The Pennsylvania congressman is under federal investigation for his corrupt relationship with the now-defunct defense lobbyist PMA Group. PMA, founded by a former Murtha associate, has been the congressman's largest campaign contributor. Since 2002, Murtha has raised $1.7 million from PMA and its clients. And what did PMA and its clients receive from Murtha in return for their generosity? Earmarks -- tens of millions of dollars in earmarks. In fact, even with all of the attention surrounding his alleged influence peddling, Murtha kept at it. Following an FBI raid of PMA's offices earlier in 2009, Murtha continued to seek congressional earmarks for PMA clients, while also hitting them up for campaign contributions. According to The Hill, in April, "Murtha reported receiving contributions from three former PMA clients for whom he requested earmarks in the pending appropriations bills." When it comes to the PMA scandal, Murtha is not alone. As many as six other Members of Congress are currently under scrutiny according to The Washington Post. They include: Peter J. Visclosky (D-IN.), James P. Moran Jr. (D-VA), Norm Dicks (D-WA.), Marcy Kaptur (D-OH), C.W. Bill Young (R-FL.) and Todd Tiahrt (R-KS.). Of course rather than investigate this serious scandal, according to Roll Call House Democrats circled the wagons, "cobbling together a defense to offer political cover to their rank and file." The Washington Post also reported in 2009 that Murtha's nephew received $4 million in Defense Department no-bid contracts: "Newly obtained documents…show Robert Murtha mentioning his influential family connection as leverage in his business dealings and holding unusual power with the military."

10.Rep. Charles Rangel (D-NY): Rangel, the man in charge of writing tax policy for the entire country, has yet to adequately explain how he could possibly "forget" to pay taxes on $75,000 in rental income he earned from his off-shore rental property. He also faces allegations that he improperly used his influence to maintain ownership of highly coveted rent-controlled apartments in Harlem, and misused his congressional office to fundraise for his private Rangel Center by preserving a tax loophole for an oil drilling company in exchange for funding. On top of all that, Rangel recently amended his financial disclosure reports, which doubled his reported wealth. (He somehow "forgot" about $1 million in assets.) And what did he do when the House Ethics Committee started looking into all of this? He apparently resorted to making "campaign contributions" to dig his way out of trouble. According to WCBS TV, a New York CBS affiliate: "The reigning member of Congress' top tax committee is apparently 'wrangling' other politicos to get him out of his own financial and tax troubles...Since ethics probes began last year the 79-year-old congressman has given campaign donations to 119 members of Congress, including three of the five Democrats on the House Ethics Committee who are charged with investigating him." Charlie Rangel should not be allowed to remain in Congress, let alone serve as Chairman of the powerful House Ways and Means Committee, and he knows it. That's why he felt the need to disburse campaign contributions to Ethics Committee members and other congressional colleagues.

www.judicialwatch.org/news/2009/dec/judicial-watch-announces-list-washington-s-ten-most-wanted-corrupt-politicians-2009

ty George

[sandi66]

Swiss Lawmakers Reject UBS Tax Deal
By DAVID JOLLY
Published: June 8, 2010
PARIS — The lower house of the Swiss Parliament voted Tuesday to reject a deal with the United States to transfer bank data from 4,450 American clients of UBS suspected of tax evasion, calling into question the future of the carefully negotiated agreement.
UBS, the largest Swiss bank, is trying to end a tax conflict with the U.S. Department of Justice that has already cost it $780 million in fines over charges that it helped Americans avoid billions of dollars in taxes.

The Swiss agreed with the United States last August to disclose the names and account details to put an end to prosecution that has weighed on both UBS and the Swiss financial markets, and to end what they described as a “fishing expedition” for details on 52,000 accounts. But the government had to take the matter to Parliament in February after a court said the agreement violated national laws governing banking secrecy.

Under Swiss law, tax fraud is a criminal offense, while tax evasion is a civil matter, a distinction not shared by the United States and most other countries.

Lawmakers in the lower house, the National Council, rejected the deal Tuesday by a margin of 104-76, with 16 abstentions. They also voted to send the measure to a referendum if necessary.

The Council of State, the upper house, last week voted in favor of the deal and against a referendum. The two houses will begin Wednesday to try to reconcile their differences. They have until June 18 to reach agreement before the end of the parliamentary session.

The Swiss government is hoping it can honor an August deadline to hand over the client data.

Parties on both the left and right have sought to tie the UBS case with broader financial reforms, particularly in the areas of so-called too-big-to-fail institutions, banker bonuses and market regulation. That appeared to be the reason the vote failed Tuesday, as both the People’s Party and the Social Democrats — the two largest parties — opposed the measure.

Serge Steiner, a UBS spokesman in Zurich, declined to comment, noting that the final vote on the matter was yet to come.

Shares of UBS fell 2.7 percent in Zurich morning trading. They are down more than 10 percent this year.

www.nytimes.com/2010/06/09/business/global/09ubs.html?src=busln


ty nalmann

[sandi66]

A Rundown of the Big Financial Services Lobbyists
June 8, 2010, 11:18 am

Few industries benefit more from contentious legislation than lobbyists in Washington. And the fight over the proposed overhaul of financial regulation has been no exception, bringing work to a passel of K Street firms.

The Center for Public Integrity has identified 10 lobbying firms that have garnered the lion’s share of work on behalf of financial services clients. While this scrum hasn’t pulled in as much money as the recent fight over the health care overhaul, the battles over new derivatives regulations and the Volcker Rule have kept the likes of Clark Lytle & Geduldig busy.

From the Center:

While the number of lobbyists who worked on the financial reform issue can be extracted from quarterly Senate lobby disclosure documents, the amount spent on the issue is less clear. About 850 businesses and organizations spent at least $1.3 billion in all of 2009 and the first quarter of 2010 on lobbying teams to work on financial reform and other issues, the Center’s analysis found. Experts say it’s a safe bet that several hundred million dollars of that total was spent on lobbyists in the financial debate because of the potential impact of reform on U.S. banks, hedge funds, insurance companies, auto dealers and other players in the financial services industry.

Topping the Center’s list with 20 clients is Clark Lytle, which represents the likes of the American Bankers Association and the Financial Services Roundtable. Its main financial lobbyist, Sam Geduldig, formerly worked for House Minority Leader John Boehner, Republican of Ohio, and Representative Roy Blunt, Republican of Missouri. The firm billed $1.26 million for its financial services lobbying

Also on the list is Brownstein Hyatt Farber Schreck, which counts 19 financial clients and $3.42 million in billings for clients including several hedge funds; the Rich Feuer Group, with 17 clients and $3.85 million in billings for clients like Goldman Sachs; and Quinn Gillespie & Associates, with 15 clients and $3.75 million in billings for clients like BlackRock.

dealbook.blogs.nytimes.com/2010/06/08/a-rundown-of-the-big-financial-services-lobbyists/


ty nalmann

[sandi66]

Iraq Finance Ministry receives $440m from Int'l Monetary Fund


09 June 2010

BAGHDAD: Iraqi Finance Ministry has received $440 million as a loan from the International Fund Monetary.

"The loan is processed according to an agreement between the two sides through which Iraq should get an amount of $3.6 billion in total from the International Fund Monetary," the Iraqi ministry said in a release on Wednesday as received by Aswat al-Iraq news agency.

It noted that the received $440 million is the first dispatch of the total amount.

"Other dispatches are coming ahead this year," the statement explained.

www.zawya.com/Story.cfm/sidZAWYA20100609105638/Iraq's%20Finance%20Ministry%20receives%20$440m%20from%20Int'l%20Monetary%20Fund

[sandi66]

Senate financial reform bill containing approved amendments released; members of conference committee named


USA
May 27 2010
A comprehensive version of the Restoring American Financial Stability Act of 2010 (Senate Bill) passed by the Senate on May 20, 2010 has been released, which incorporates all of the approved amendments into the text of the bill, including those revised on the floor during debate. The updated derivatives title of the Senate Bill is available here. Additionally, we have prepared a revised chart with section references to the updated Senate Bill, which compares the Senate Bill with the bill passed by the House (H.R. 4173) and the Administration’s original proposal for derivatives regulation.

Congressional leaders have released a tentative timeline indicating that the reconciliation conference for financial regulatory reform legislation will begin the week of June 7, 2010, with the goal of having a final Bill ready for the President’s signature by the July 4th recess. The finalized list of Senators taking part in the conference, as well as a tentative list of Congressmen proposed for inclusion by Rep. Barney Frank (D-MA), are as follows:

Senate

Tim Johnson (D-SD)

Jack Reed (D-RI)

Chuck Schumer (D-NY)

Chris Dodd (D-CT)

Blanche Lincoln (D-AR)

Tom Harkin (D-VT)

Pat Leahy (D-VT)

Dick Shelby (R-AL)

Bob Corker (R-TN)

House

Barney Frank (D-MA)

Carolyn Maloney (D-NY)

Paul Kanjorski (D-PA)

Luis Gutierrez (D-IL)

Maxine Waters (D-CA)

Melvin Watt (D-NC)

Gregory Meeks (D-NY)

Dennis Moore (D-KS)


www.lexology.com/library/detail.aspx?g=b5601bdf-2116-4c0e-8a93-66a997822914

[sandi66]

Global Bank Pact Advances
Regulators Discuss Bigger Cushion for Losses, but a Delayed Start to 'Basel' Rules

June 4, 2010

By DAVID ENRICH And DAMIAN PALETTA
International regulators are moving closer to an agreement that would require large multinational banks to raise vast sums to cushion any future losses. But in a concession to the banking industry and some governments, the rules are likely to take effect later than expected, according to people familiar with the matter.

In the aftermath of the worst banking crisis since the Great Depression, regulators and finance ministers from more than 20 nations are racing to hammer out by year end the new rules concerning bank capital and liquidity. The overhaul is expected to be a focal point of this weekend's Group of 20 meetings in South Korea. It is also expected to gain momentum at a meeting of the Basel Committee on Banking Supervision.

The talks remain fluid, and some U.S. officials are nervous that nationalistic turf battles could threaten a final deal, say people familiar with the process.

The proposed rules are part of the Basel Accord, which was initially set up in the late 1980s to create uniform capital standards for banks around the world. The rules have since been updated multiple times. But major flaws in its approach were exposed by the global financial crisis in 2008. The goal of the new rules is to foster a more-conservative banking system less vulnerable to crisis.

Industry and government officials believe the changes will have greater implications for banks and the global economy than the U.S. regulatory changes emerging in Washington. Initially, the changes were widely expected to kick in at the end of 2012.

But a consensus is emerging for a gradual implementation that could stretch several years beyond 2012, say U.S. and European officials familiar with the talks. Banks and some governments—notably Japan, Germany and France—have pushed for a slowdown, arguing that the current deadline could lead to multi-trillion-dollar funding shortfalls at a time when much of the banking sector will likely still be fragile.

Other crucial details remain unresolved, including disputes over the types of funds that banks will be allowed to count toward toughened capital and liquidity requirements.

Bank executives, sometimes with backing from their governments, have been waging an intense lobbying campaign to water down parts of the Basel proposals, known for the Swiss city in which the accords traditionally have been negotiated. Specific targets: provisions that narrowly define acceptable forms of liquidity. Even if the changes are relaxed, though, analysts project that the rules could crimp banking-industry profits by a double-digit percentage.

The banks have been trying to use their central role in supporting economies to urge regulators to back off. They are arguing that the new capital and liquidity requirements are so onerous that they will force institutions to curtail already-sparse lending, which could imperil fragile economic recoveries world-wide. They have also insisted that they need more time to adjust to new rules.

"In combination, the proposals will inevitably reduce credit availability, increase the cost of borrowing and lead to slower economic growth," warned an April 16 letter from Bank of America Corp.'s treasurer to the Basel committee. The letter by the largest U.S. bank in assets called the proposed two-year implementation time frame "too brief given the current state of the economy and the magnitude of the effort."

As part of the rule-making process, the banks conducted studies this spring to gauge the likely impact of the proposals on their capital and liquidity levels.

The data show that banks world-wide would face huge capital and liquidity shortfalls under the proposals, according to government and industry officials briefed on the results.

In Europe, bank executives say there is likely to be a gap of more than €1 trillion ($1.2 trillion) between banks' current capital and liquidity buffers and what would be required under the Basel proposals.

In comparison, stress tests ordered by the U.S. government last year resulted in 10 of the nation's biggest banks being told to raise a combined $74.6 billion in capital to cushion themselves.

In discussions with banks, some government officials, particularly from the U.S. and the U.K., have expressed skepticism about the findings, arguing that the banks have an incentive to be overly gloomy. Nonetheless, officials believe that the capital and liquidity holes might be too deep for banks to quickly fill, according to the people familiar with the matter.

Those convictions have hardened over the past month, as risk-averse investors fled European banks due to jitters about the escalating sovereign-debt crisis. Even without the new rules, European banks face the challenge of renewing roughly €800 billion in debt that is set to mature by the end of 2012, according to the European Central Bank.

As a result, a broadening consensus has emerged among several countries that the rules should take effect slowly. The Basel committee said in December there would be a phase-in period "to ensure a smooth transition to the new standards," but it didn't specify the length of that period.

France, Germany and Japan have pushed for as much as a 10-year window before the rules go fully into effect.

U.S. and U.K. officials recently have indicated that they would support a gradual timeframe, according to people familiar with the matter.

"I'm perfectly comfortable with us negotiating a reasonable transition period to help make people more comfortable that they can live with those new standards," U.S. Treasury Secretary Timothy Geithner said Wednesday afternoon in Washington, before leaving for the G-20 meeting.

A gradual approach carries risks. A previous version of the Basel accord, which was supposed to be implemented in 2004, has been dogged by complaints that certain countries, including the U.S., have been slow to require their banks to comply.

Write to David Enrich at [e-mail] and Damian Paletta at [e-mail]

online.wsj.com/article/SB10001424052748703340904575284731793705288.html

[sandi66]

Home G20 Scraps Global Bank Tax Plan

Date: 09-Jun-2010

Rich countries over the weekend scrapped plans for a universal global bank tax. The levy would give countries plenty of wiggle room to make banks pay for their bailouts in future.

Finance Ministers from the Group of 20 countries ended a two-day meeting that reviewed progress on a string of initiatives adopted last year to make the financial system safe and protect taxpayers from paying for banks’ rescue.

Attempts to introduce a global bank levy were finally ditched after opposition from Japan, Canada and Brazil, whose banks needed no public aid during the worst financial crisis since the 1930s.

“There is no agreement to proceed with an ex ante bank tax,” said Canadian Finance Minister, Jim Flaherty. The G20 said it recognized that there was a range of policy approaches that would approve a set of principles later this month in Toronto.

British Finance Minister, George Osborne reiterated his pledge to introduce a UK bank tax regardless of what other countries would do. He is expected to announce his plans in a budget report on June 22.

“Different countries will do different things but to have it under the umbrella of the G20 is going to be helpful,” Osborne told reporters. Britain was forced to shore up the banking sector and rescue several firms.

The meeting did not adopt new regulation or alter deadlines for implementing steps. But ministers sought to keep plans for tough new Basel III bank capital and liquidity rules on course for implementation by the end of 2012 despite deep-seated concerns among several countries.

“We are on track to deliver the proposals at the Seoul summit in November. Ministers are fully engaged in finding the right compromises,” Financial Stability Board Chairman, Mario Draghi told reporters.

Several Finance Ministers signaled that a lengthy phase-in for Basel III beyond 2012 was now inevitable. Draghi, who overseas implementation of the G20's financial reform pledges, said Basel was not expected to take full effect by the deadline.

“The key thing is to start the implementation in 2012. Then we will kind of find out what are the most appropriate transition times,” Draghi said. Banks warn the adoption of tougher requirements would force them to raise fresh capital to aid economic recovery.

The G20 also agreed to speed up the introduction of measures to improve transparency, regulation and supervision of hedge funds, credit rating agencies. “We are also committed to improving the functioning and transparency of commodities markets,” the G20 statement said.

Some policymakers have accused speculators of abusing commodities markets. Despite the failure to make headway on a universal bank levy and slippage in full Basel III roll-out, policymakers noted that the United States is expected, within weeks, to approve the most sweeping reform of financial rules since the 1930s that would introduce the bulk of G20 reform pledges.

The European Union is adopting new rules on supervision and hedge funds, with a draft law on derivatives regulation due next month. Elena Salgado, Economy Minister of Spain said more EU regulation was needed for credit ratings agencies, which lacked transparency and accountability.

“To have a European credit ratings agency is another issue. Perhaps it would be good, but it's something that cannot be done from one day to the next,” Salgado told Reuters.



business.peacefmonline.com/economy/201006/46022.php

[sandi66]

JUNE 9, 2010, 7:57 A.M. ET 2nd UPDATE: Milan Judge Adjourns

Derivatives Trial To June 23

By Sabrina Cohen

Of DOW JONES NEWSWIRES

(Adds background, prosecutor remarks.)

MILAN (Dow Jones)--A Milan judge adjourned Wednesday a landmark derivatives trial against four international banks accused of fraudulently selling derivatives on a bond by two weeks to June 23.

Judge Oscar Magi, who recently took over the proceedings, also ruled that several parties including dozens of consumer groups couldn't join the City of Milan in seeking damages from the banks. The same banks that are standing trial also weren't allowed to seek damages by the judge Wednesday.

Alfredo Robledo, the Milan-based prosecutor that has ordered the banks to face trial, Wednesday said that the fact that the banks weren't allowed to seek damages marks a first important step within the Italian legal system.

The judge granted that right to one association, Adusbef, which defends the rights of consumers of financial services, because it was formed before 2005, when the bond was sold.

Deutsche Bank AG (DB), UBS AG (UBS), JPMorgan Chase & Co. (JPM) and Depfa Bank--the Irish unit of Germany's Hypo Real Estate Holding AG--face aggravated fraud charges of reaping some EUR100 million in illicit profits from the irregular sale of derivatives. The banks deny any wrongdoing. Eleven bank employees and two former Milan city employees face the same charges as the banks.

For the last ten years Italian municipalities, including Milan, were invested heavily in structured products linked to interest rates, mainly because Italian and international banks were granting credit very easily. The practice ended in 2008 when the government banned the use of derivatives at local municipalities.

According to a Bank of Italy report, over 500 Italian cities and towns are facing over EUR2.5 billion of potential mark-to-market losses from derivatives operations. market participants say that the multibillion sum could increase in future months if interest rates are raised.

online.wsj.com/article/BT-CO-20100609-705916.html?mod=WSJ_World_MIDDLEHeadlinesEurope

[sandi66]

Senate Dems Expect to Pass Tax Extenders & Unemployment Extension Bill HR 4213 by Next Week

June 09, 2010 04:57 PM EDT

According to Senate Democratic leaders on Tuesday of this week, there is a high confidence level that the Senate version of House bill HR 4213, the so-called "tax extenders" bill, will pass the upper chamber by next week.

Senate Majority Leader Harry Reid (D-NV) said, "We're going to pass this good jobs bill that is on the floor."



He also expressed his opinion that the House would then pass the amendments made by the Senate to send a final bill to President Obama for signature, noting that the Senate had made a few modifcations, but not many.

The main deviations from the House bill appear to be $24 billion more in state aid for Medicaid and a slightly lower tax burden on carried interest paid by the downtrodden demographic of hedge fund managers, VC funds, and real estate partnerships.

Senator Charles Schumer (D-NY) said that this provision made the tax code more fair. It's unclear whether he was speaking of the increased tax burden in general or the lower version proposed by the Senate.

This bill would also extend the deadline to file for unemployment insurance benefits under the current system of 4 tiers up through the end of November 2010.

politics.gather.com/viewArticle.action?articleId=281474978289999


ty colada

[sandi66]

Strong smell of bank death in Paris. Since September 2009, Société Générale has lost half its value.

Thursday, June 10, 2010

alcuinbramerton.blogspot.com/2010/04/altnews4-httpalcuinbramerton.html



Alcuin Bramerton profile ..... Index of blog contents ..... Home
Euro vs Japanese Yen - August 2009 to June 2010 (chart)

Strong smell of bank death in Paris. Since September 2009, Société Générale has lost half its value. Even for profligate France, this represents capital destruction on a spectacular scale (chart).
SocGen and all French banks are now openly warehousing every Euro bill they can find with the European Central Bank. Commercial EuroZone bankers do not want to hold Euros. And SocGen rogue trade insider, Jerome Kerviel, is lifting the lid off the playboy risk culture endemic within the Société Générale investment casino. More here (09.06.10). And another Jerome Kerviel picture here (09.06.10).
Managing an investment portfolio in Europe can put you on the fast track to a mental asylum. Only a playwright like Luigi Pirandello, who lived with a schizophrenic wife and wrote plays like Henry IV with its multiple levels of reality, could cope with the financial landscape of today’s Europe.
With the political élite so committed to the European Monetary Union process, which they rightly see as critical to the survival of the European Union, European economic distortions will only become more severe. Differences within the EuroZone are extreme. Ireland saw its nominal GDP drop by 10.2% last year, a decline similar to those experienced in the Great Depression of 1929-1939, while the German economy recently grew at a nominal rate of above 3%. The value of the Euro would have to be $0.31 to balance Greece’s international position, and the number for Spain is $0.34, while Germany could effectively compete in the international marketplace with a Euro over $1.80. John Taylor, Chief Investment Officer of FX Concepts, speaks plainly about the terminal chaos in the EuroZone.

Posted by John MacHaffie at 2:23 AM

nesaranews.blogspot.com/

[sandi66]

SEC Approves New Stock-by-Stock Circuit Breaker Rules
FOR IMMEDIATE RELEASE
2010-98
Washington, D.C., June 10, 2010 — The Securities and Exchange Commission today approved rules that will require the exchanges and FINRA to pause trading in certain individual stocks if the price moves 10 percent or more in a five-minute period. The rules, which were proposed by the national securities exchanges and FINRA and published for public comment, come in response to the market disruption of May 6.


--------------------------------------------------------------------------------

Additional Materials
Order Regarding FINRA
Order Regarding Exchanges

--------------------------------------------------------------------------------

The SEC anticipates that the exchanges and FINRA will begin implementing the newly-adopted rules as early as Friday, June 11.

"The May 6 market disruption illustrated a sudden, but temporary, breakdown in the market's price setting function when a number of stocks and ETFs were executed at clearly irrational prices," said SEC Chairman Mary Schapiro, who convened a meeting of the exchange leaders and FINRA at the SEC following the market disruption. "By establishing a set of circuit breakers that uniformly pauses trading in a given security across all venues, these new rules will ensure that all markets pause simultaneously and provide time for buyers and sellers to trade at rational prices."

Under the rules, trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes. The pause, which would apply to stocks in the S&P 500® Index, would give the markets the opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion. Initially, these new rules would be in effect on a pilot basis through Dec. 10, 2010.

The markets will use the pilot period to make appropriate adjustments to the parameters or operation of the circuit breakers as warranted based on their experience, and to expand the scope to securities beyond the S&P 500 (including ETFs) as soon as practicable.

"It is my hope to rapidly expand the program to thousands of additional publicly traded companies," added Chairman Schapiro.

At Chairman Schapiro's request, the SEC staff also will:

Consider ways to address the risks of market orders and their potential to contribute to sudden price moves.
Consider steps to deter or prohibit the use by market makers of "stub" quotes, which are not intended to indicate actual trading interest.
Study the impact of other trading protocols at the exchanges, including the use of trading pauses and self-help rules.
Continue to work with the exchanges and FINRA to improve the process for breaking erroneous trades, by assuring speed and consistency across markets.
The SEC staff is working with the markets to consider recalibrating market-wide circuit breakers currently on the books — none of which were triggered on May 6. These circuit breakers apply across all equity trading venues and the futures markets.

# # #



www.sec.gov/news/press/2010/2010-98.htm


ty nalmann

[sandi66]

Cobell Deadline Extended Again

By Ryan J. Reilly

June 15, 2010 5:39 pm

For the fifth time, lawyers in a class action suit brought by American Indians against the federal government have reached an agreement with the Justice Department to extend the deadline for Congress to approve a settlement. The new deadline is July 9.
“The Department of Justice continues its work to implement the Cobell settlement,” Justice Department spokeswoman Melissa Schwartz said in a statement. “In light of the legislative schedule, the parties have agreed to extend the June 15, 2010 legislative enactment deadline for congressional enactment to July 9, 2010.”
Justice and Interior Department officials announced in December that they had reached a deal with the American Indian plaintiffs to settle a lawsuit that accused the Interior Department of mishandling thousands of individual Indian trust fund accounts over more than a century. The lawsuit is called Cobell after lead plaintiff Elouise Cobell. But the $1.41 billion deal requires congressional approval, and the deadline for Congress to sign off on the deal has already been extended several times.
“It’s not an arbitrary date, there’s a lot of activity going on right now,” lead counsel for the plaintiffs Dennis Gingold said. “Obviously we’re hoping it’s going to be passed before [the deadline].”
The House passed legislation approving the deal late last month, but the Senate still needs to OK the agreement before it can go into effect. The required legislation is attached to an unrelated jobs and tax package that is currently awaiting a vote on the Senate floor.
One issue of contention is the cap on lawyers’ fee. Sen. John Barrasso (R-Wyo.) has proposed an amendment that would cap the fees at $50 million, instead of the $100 million specified in the deal.
The head of the country’s most prominent Native American organization, the National Congress of American Indians, recently sent a letter to Senate leaders in support of the Barrasso amendment.
Attorney General Eric Holder and Interior Secretary Ken Salazar wrote letters to Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) asking the Senate to pass the settlement without amendments. According to Holder and Salazar, any changes could nullify the deal.
Reid has scheduled a procedural vote to end debate on the measure for Wednesday, but he may be short of the 60 votes needed to overcome a Republican filibuster of the package.

www.mainjustice.com/2010/06/15/cobell-deadline-extended-again/



ty nalmann

[travelbugaz]

Swiss parliament clears way for US tax deal
Swiss parliament drops plan to hold referendum on deal handing over US tax cheat files

Swiss Federal Councillor Eveline Widmer-Schlumpf, head of the Federal Department of Justice and Police,speaks during the debate on a deal with the United States that enables the handover of data on thousands of customers of the Swiss bank UBS, at the National Council in Bern, Switzerland, Tuesday, June 15, 2010. Parliamentarians on Tuesday voted 81 to 61 (53 abstentions) in favour of the controversial settlement deal on sharing banking data that was signed last August between the US and Switzerland. (AP Photo/Keystone/Lukas Lehmann)
Eliane Engeler, Associated Press Writer, On Thursday June 17, 2010, 6:00 am EDT
GENEVA (AP) -- Swiss lawmakers on Thursday gave final approval to a treaty with the United States that will hand Washington thousands of files on suspected tax cheats, agreeing to drop plans to allow a referendum on the issue.

Parliament's upper and lower house agreed that there will be no possibility of referendum on the deal that will see the country's biggest bank, UBS AG, divulge the names of 4,450 American clients suspected of tax evasion to U.S. authorities.

The agreement between both houses secured final approval of the treaty, which the government hopes will eventually end UBS's three-year battle with U.S. tax authorities that culminated in revelations the bank had for years helped American clients hide millions of dollars in offshore accounts.

UBS chief executive Oswald Gruebel welcomed the decision.

"I and the whole bank thank the Federal Council and those parliamentarians who worked to find a solution to this issue," he said in a statement.

Shares in UBS went up 2.7 percent by noon at 15.93 Swiss francs ($14.10) on the Zurich exchange.

The lower house voted 81-63 to drop its earlier demand that Swiss voters should be allowed to approve the deal in a referendum before it comes law. Forty-seven lawmakers abstained.

A popular ballot would have made Switzerland miss a late August deadline to hand over all 4,450 names because the vote would have been held in November at the earliest.

"Nothing now stands in the way of UBS client details being disclosed in cases where the decision handed down has taken legal effect," said the Swiss Justice Ministry in a statement.

The deal is crucial to UBS, which has faced intense pressure from U.S. authorities since 2007. Last year the bank agreed to turn over hundreds of client files and pay a $780 million penalty in return for a deferred prosecution agreement. But Washington has signaled that unless UBS reveals the further 4,450 American names demanded in the U.S.-Swiss agreement, it may face a crippling civil investigation just at a time when the bank is recovering from the subprime crisis and seeking to rebuild its U.S. business.

Swiss authorities have already transmitted the names of about 400 UBS clients who signed waivers as part of the International Revenue Service's voluntary disclosure program, according the Swiss Federal Tax Administration. A further 100 UBS clients gave their consent directly to Swiss authorities.

The Swiss Banker's Association said it was pleased with parliament's decision "because it means Switzerland can at last deliver what it promised in the agreement of last August," said spokesman James Nason.

He rejected the suggestion that Swiss banks might now suffer an exodus of foreign clients fearful their details could be divulged next. "We've got no indications that's going to happen."

Martin Naville, chief executive of the Swiss-American Chamber of Commerce, which has 2,450 members, said "a public vote with all those emotional topics would have been a tricky thing."

Among the risks Swiss companies would have faced had the treaty been further delayed or even voted down were general insecurity, greater scrutiny by the IRS, and a refusal by Congress to ratify a new double taxation agreement that is vital to businesses operating in both countries, said Naville.

"Had this been rejected we would also have put ourselves on top of the list of tax havens, whether justified or not," Naville added.

But Naville said the decision was only one in a series of course changes taken by Switzerland on banking secrecy in recent year.

The country's political and business leaders had realized long ago that "the time to hide money in Switzerland is over," he said.

Associated Press writer Frank Jordans contributed to this report.


camrhon.proboards.com/index.cgi?board=safe&action=post&thread=6391&page=21

[travelbugaz]

EU works on economic policy coordination in crisis

Topics:International On Thursday June 17, 2010, 8:26 am EDT
By Julien Toyer and Timothy Heritage

BRUSSELS (Reuters) - European Union leaders moved toward agreement on Thursday on ways to strengthen budget discipline and economic policy coordination among the 27 member states to contain a euro zone debt crisis.

EU diplomats said the leaders were broadly in agreement at a one-day summit on proposals to present budget plans to the executive European Commission for assessment and to penalize countries that do not aim for budget balance.

They faced pressure from some states to agree a levy to raise money from banks blamed for the economic crisis and calls for the results of stress tests that check banks' financial health to be published. Divisions remained on both issues.

The EU, which represents more than 500 million people, has agreed on a 500 billion euro ($617 billion) safety net to help struggling countries that use the euro and a 110 billion euro aid mechanism for heavily indebted Greece.

But despite repeated denials, national leaders and the Commission have failed to allay concern that Spain will follow Greece by seeking financial help.

"I think Europe is still in a fragile situation when it comes to public finances," Swedish Prime Minister Fredrik Reinfeldt said on arrival for the one-day summit in Brussels.

"We need to show leadership and determination on Europe ... and coordinate the measures needed."

Such concerns prompted Commission President Jose Manuel Barroso to propose accelerating the presentation of proposals for changes to EU budget rules.

The proposals, to be outlined on June 30, will focus on early budget coordination, reducing debt and more sanctions for rule breakers, and will offer details on ways to ensure EU budget rules are reflected in national law, EU sources said.

"The Commission will further fast-track its work on economic governance," one EU envoy said.

SHOW OF UNITY

A show of unity was likely at the summit, which was reviewing the findings of a task force set up to look at reforms designed to prevent debt building up, increase cooperation and set up a permanent aid mechanism for countries in debt trouble.

The leaders were not seeking a formal agreement on how to deepen policy coordination, but any sign of divisions could increase the market nervousness that has helped drive down the euro and shares globally this year.

Luxembourg Prime Minister Jean-Claude Juncker, who heads the Eurogroup of finance ministers from the 16 EU countries that use the euro, acknowledged in a newspaper interview that Spain faced problems.

But he said Madrid would not be a specific item on the leaders' agenda, and financial markets were boosted by a successful bond auction in Spain.

EU leaders broadly concur on the need for closer policy coordination, or "economic government," and for tighter financial regulation, but do not agree how to go about it.

Differences linger between German Chancellor Angela Merkel and French President Nicolas Sarkozy, who lead the euro zone's biggest economies, despite agreement on some issues at talks on Monday.

Britain is hostile to parts of the drive toward closer budget surveillance and says it will not allow its budget plans to be submitted to the European Commission for review before the national parliament.

"We of course always defend our national interests as others do, and our national red lines, but we know how important it is that there is in Europe growth and confidence and that, I think, is the most important issue on the agenda," British Prime Minister David Cameron said, attending his first EU summit.

STRESS TESTS AND BANK LEVY

The leaders were pressing on with discussion of moves toward a European banking levy after the world's top economies failed to agree on such a tax for an industry widely blamed for the global economic meltdown.

They aim to agree a joint position for the G20 summit in Toronto on June 26-27. Merkel appealed to the other leaders to back the bank levy but divisions remain over how any measures should be implemented.

Pressure is also mounting for European regulators to publish results of stress tests on individual banks to restore market confidence and overcome a partial freeze in interbank lending.

Some countries, such as Germany, are reluctant to publish the results of stress tests for individual lenders that could lay bare unpleasant details about their financial health.

An EU source said the results of stress tests being carried out on European banks would not be published before the beginning of July.

"We have been asking for increased transparency all the time ... but I know that there are some differences in the positions sometimes regarding this," Sweden's Reinfeldt said.

(Additional reporting by John O'Donnell, David Brunnstrom, Luke Baker, Ilona Wissenbach, Marcin Grajewski and Justyna Pawlak; Editing by Dale Hudson)



finance.yahoo.com/news/EU-works-on-economic-policy-rb-1320762792.html?x=0

[travelbugaz]

Greece on track with reforms, IMF, EU say
Greece on track with reforms needed for bailout package, say IMF, ECB, EU

Topics:International
A man looks at a shuttered metro station entrance during a 24-hour strike by subway workers in Athens on Wednesday, June 16, 2010. The strike was held in support of 285 contract workers whose contracts are expiring and face losing their jobs. All public transport workers have also called a five-hour work stoppage for Thursday to protest salary cuts and social security reforms, which the government is imposing in order to pull Greece out of its debt crisis. (AP Photo/Petros Gianakouris)
On Thursday June 17, 2010, 9:40 am
ATHENS, Greece (AP) -- Debt-ridden Greece is on track with the reforms required as part of the rescue package that saved it from bankruptcy, a delegation from the International Monetary Fund, European Central Bank and the European Commission said Thursday.

The delegation was in Athens to review progress in the austerity measures the government has been implementing in order to pull the country out of a financial crisis that brought it to the brink of default last month.

The delegation said Thursday the deficit was lower than had been projected and the government was adhering to firm spending control.

"Fiscal developments are positive with central government revenues coming in closely as expected and with firm expenditure control in the state budget," the delegation said in a joint statement, adding that based on preliminary data to the end of May, "the state budget deficit was lower than was projected in the program."

The team, which arrived in Athens on Monday and was leaving on Thursday, is to return in late July for a full review of Greece's progress in the three-year euro110 billion ($136 billion) package of rescue loans.

Greece received the first installment of loans in May, just in time to prevent default and repay government bonds that were maturing. It is to receive the next in September if the July review -- the first formal review -- shows it is still on track.

To secure the funds, the center-left government has taken austerity measures that aim to make its bloated public sector less wasteful and its shrinking economy more competitive. It has pledged to cut its massive budget deficit from 13.6 percent of gross domestic product in 2009 to 2.6 percent in 2014.

The reforms have met with a backlash from labor unions, who have staged a series of strikes and demonstrations.

A communist party-backed labor union has called for a protest rally Thursday evening, a day after the government unveiled a draft presidential decree making it easier for companies to fire workers by raising the number of layoffs allowed and enabling lower compensation payments.

Under the Labor Ministry's proposed reforms, the number of workers that companies employing more than 150 people can fire will be increased to 5 percent of the work force per month from the current 2 percent. Smaller companies will be able to lay off a maximum of six workers.

The draft decree also slashes the notice period a company is required to give an employee being fired from the current 24 months to four months. If workers are given full notice, employers will pay half the compensation required for sudden layoffs.

New figures released Thursday showed unemployment hit a 10-year high in the January-March period, reaching 11.7 percent compared to 9.3 percent in the first quarter of 2009. A total 47,000 jobs were lost compared to a year earlier.

Unemployment was highest in the 15-29 age group, where it reached 22.3 percent.

finance.yahoo.com/news/Greece-on-track-with-reforms-apf-2174501873.html?x=0

[travelbugaz]

Germany wants bank stress tests to be published
Germany says bank stress tests should be published EU-wide to restore market confidence

Topics:International Juergen Baetz, Associated Press Writer, On Thursday June 17, 2010, 9:59 am
BERLIN (AP) -- Germany wants to see the results of stress tests for banks in the European Union to be made public in an effort to restore market confidence, a finance ministry official said Thursday.

The comment marks a turn-about in Germany's position -- previously it had opposed publication of the tests checking the banks' stability, citing fears the results could spook investors.

But the official, who spoke on condition of anonymity in line with department policy, said that in the current financial situation, full transparency is more important and could be a "stabilizing and helpful factor."

"It always depends on the market environment," he said, adding that Germany will push for the publication at the EU-level.

The matter was likely to be discussed as early as Thursday in Brussels, where the EU's 27 leaders are holding a summit which initially was to focus on solutions for the bloc's long-term economic strategy.

Diplomats say most European governments are also in favor of publishing banking "stress tests" for the first time, as the U.S. did in 2009 to show how much capital the country's 19 biggest banks needed to raise to cope with more losses.

Markets remain jittery since Greece was save from bankruptcy by a bailout and fears persist that other European countries could have trouble paying back their loans. European banks are among the biggest holders of those nations' government debt.

Stress tests give an estimate of what potential losses financial institutions could be facing. If a result shows that an institution can't cope with necessary write-downs in case of a worsening market environment, the bank is required to increase its capital ratio.

The debate of making bank results public was revived this week by Spain, which said it would publish the stress tests in an effort to calm market worries, after speculation about its allegedly shaky banking system spooked investors.

"By announcing its intention to publish the results, Spain has raised the stakes and markets' expectations -- now it will need to show that it is up to the challenge," UniCredit's chief economist, based in London, said in a research note on Thursday.

If this transparency effort is successful and other countries follow suit, Europe could "finally clear the air on the health of its financial system," Marco Annunziata said.

Spain, which is heavily indebted, faces high unemployment, poor growth prospects and tumbling house prices, came under fire recently as markets started questioning its ability to refinance.

However, the country passed a key test on Thursday with a successful auction of 10- and 30-year Treasury bonds. The auctions were oversubscribed 1.89 and 2.45 times, respectively, and sent the euro rallying against the dollar.

The chief executive of Germany's biggest lender, Deutsche Bank's Josef Ackermann, last week welcomed the idea of publishing the stress tests, but insisted it would also require a mechanism for recapitalizing troubled banks to be in place.

A spokesman for the Association of German Banks also cautiously welcomed the initiative. If the publication is properly done, with the necessary accompanying information putting the results in context, it can contribute to restoring market trust, Lars Hofer told the AP.

He warned, however, that it could be dangerous to single out certain banks or publish the raw information without properly explaining it. "Given the current market situation, this could be a considerable risk."

Associated Press Writers Aoife White in Brussels and Daniel Woolls in Madrid contributed to this report.

finance.yahoo.com/news/Germany-wants-bank-stress-apf-626083979.html?x=0

[travelbugaz]

Afghan mineral wealth may be greater: $3 trillion
Afghanistan says its untapped mineral wealth is at least $3 trillion -- triple US estimate

Topics:International
An Afghan journalist walks by precious stones on display as he attends a press conference of Afghan Minister of Mines Wahidullah Shahrani in Kabul, Afghanistan on Thursday, June 17, 2010. An Afghan mining official says the untapped minerals in the war-torn country are worth at least $3 trillion, triple a U.S. estimate. (AP Photo/Musadeq Sadeq)
Deb Riechmann and Amir Shah, Associated Press Writer, On Thursday June 17, 2010, 9:19 am
KABUL, Afghanistan (AP) -- Afghanistan's untapped mineral wealth is worth at least $3 trillion -- triple a U.S. estimate, according to the government's top mining official, who is going to Britain next week to attract investors to mine one of the world's largest iron ore deposits in the war-torn nation.

Geologists have known for decades that Afghanistan has vast deposits of iron, copper, cobalt, gold and other prized minerals, but a U.S. Department of Defense briefing this week put a startling, nearly $1 trillion price tag on the reserves. Minister of Mines Wahidullah Shahrani said Thursday that he's seen geological assessments and industry estimates that the minerals are worth at least $3 trillion.

"Afghanistan has huge untapped natural energy and mineral resources which have enormous potential for our economic development," Shahrani said. "Ensuring that this is done in the most transparent and efficient way while delivering the greatest value to the country is a priority of the government."

Critics of the war have questioned why the nation's mineral worth was being promoted at a time when violence is on the upswing and the international coalition is under rising pressure to prove that its counterinsurgency strategy is working.

They argue that if impoverished Afghanistan is seen as having a bright economic future, it could help foreign governments persuade their war-fatigued publics that securing the country is worth the fight and loss of troops. It also could give Afghans hope, U.S. officials say.

But Shahrani insisted that the release followed months of work to assess the mineral deposits with the aid of old geological information obtained by several different nations over more than three decades of conflict.

"There has been regular communication, regular exchange of information between the Ministry of Mines and the U.S. Geological Survey. Three months ago they shared this information with us," Shahrani said. "We were just waiting for the exchange of information from Washington to Kabul."

President Hamid Karzai mentioned the mineral wealth at a May 13 event with U.S. Secretary of State Hillary Rodham Clinton in Washington, but he did not elaborate. The Ministry of Mines held a news conference in the Afghan capital following a story about the Pentagon estimate in The New York Times.

Shahrani said the ministry has been working with international partners to assess Afghanistan's mineral reserves and improve the expertise of Afghan geologists. In addition, Shahrani said mineral and hydrocarbon laws have been updated to meet international standards and efforts are being made to prevent possible corruption in the awarding of contracts.

In November, two U.S. officials familiar with intelligence reports alleged that Afghanistan's former minister of mines, Mohammad Ibrahim Adel, accepted $20 million after a $3 billion contract to mine copper was awarded in late 2007 to China Metallurgical Group Corp. The former minister has denied having taken any bribes and said the contract went through all legal channels.

Aynak, a former al-Qaida stronghold southeast of Kabul, is thought to hold one of the world's largest unexploited copper reserves. Mining the copper could produce 4,000 to 5,000 Afghan jobs in the next five years and hundreds of millions of dollars a year to the government treasury, Shahrani said.

Craig Andrews, a lead mining specialist for the World Bank, said Aynak was expected to start producing copper within two to three years. Production of more than 2 billion tons of iron ore at Hajigak in central Bamiyan province, a relatively safe area of the country, could begin in five to seven years, and possibly sooner, he said.

Andrews noted that studies show that every mining job creates five to 10 other jobs.

"Clearly, these mines will have a huge economic stimulus effect on not only the national economy, but the region in which they are located in," Andrews said. "I think when people have jobs and they have an income, they have a stake in the future and the future does not include insecurity. I think once the communities are anchored in an economy that gives them jobs money and income they would be less inclined to support the Taliban or other insurgent groups."

(This version CORRECTS Corrects 2 billion tons of iron ore instead of 2 million in graf 12. Moving on general news and financial services.)

finance.yahoo.com/news/Afghan-mineral-wealth-may-be-apf-3305688522.html?x=0

[sandi66]

Treasury to Gain Expanded Powers in U.S. Financial Overhaul
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By Ian Katz

June 18 (Bloomberg) -- The U.S. Treasury Department under Secretary Timothy F. Geithner is coming out of the worst economic crisis since the Great Depression with expanded powers to guard against future threats to financial stability.

Geithner, who has managed taxpayer bailouts of companies from Citigroup Inc. to General Motors Co., would lead a council to monitor large financial firms under legislation House and Senate negotiators aim to complete by July 4. Lawmakers confirmed the council’s basic functions yesterday and may approve final language next week. Geithner would also get a research unit that could demand data from banks and regulators and a new national insurance office.

The Treasury-led council’s role includes identifying companies that might be shut down because they pose a risk to the financial system. That authority, even if well-intentioned, could be used for political ends, said Phillip Swagel, a former Treasury economist who’s now a professor at Georgetown University in Washington.

“It’s such an open-ended grant of power,” said Swagel, who worked for Republican Treasury Secretary Henry Paulson. “Do we really want to give that to every future administration?”

Tom Quaadman, vice president of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, said the legislation will give Treasury “enormous new powers.”

The Treasury would also be required to approve any emergency lending by the Federal Reserve. The Fed used its emergency powers during the crisis to rescue American International Group Inc. and Bear Stearns Cos.

The Treasury’s new powers are one element of legislation that Geithner has called “the most sweeping financial reform that we’ve considered in generations.”

Council Members

The council, which also includes the chairmen of the Fed, Securities and Exchange Commission and the FDIC, would have the authority to recommend that the central bank and other agencies toughen rules to reduce risk at financial institutions.

Some of its decisions, such as ruling that a non-bank financial company should be subject to Fed supervision, couldn’t be made without the Treasury secretary’s approval.

“While it mostly has powers of recommendation, it clearly has the ability to affect regulation and set the agenda,” said Chuck Muckenfuss, a partner at Gibson, Dunn & Crutcher LLP in Washington who specializes in financial regulation and policy.

The council would include, as a non-voting member, the director of a new Treasury financial research office. While the office isn’t intended to “snoop on people,” it would have broad power to ask companies for information, Swagel said.

Large Banks

The office would obtain data and conduct research on systemic risk and require banks with assets of $50 billion or more to give information not otherwise available about its financial condition and internal systems.

The success of the research office depends on how its work is used, said Mark Calabria, director of financial regulation studies at the Cato Institute in Washington and a former aide to Republican Senator Richard Shelby of Alabama.

“It’s an open question whether the financial research done at Treasury will end up serving the policy goals of the Treasury secretary, or will they actually build a strong, independent function,” Calabria said.

Geithner, 48, will be gaining authority after being the target of a public and political backlash over the $700 billion Troubled Asset Relief Program. Lawmakers including Senator Maria Cantwell, a Democrat from Washington state, and Representative Jeb Hensarling, a Texas Republican, said the Treasury favored Wall Street banks over Main Street.

Fed Scrutiny

As companies including Citigroup and Bank of America Corp. repaid bailout funds last year, the Treasury escaped the ire of lawmakers debating whether to curb central bank’s independence and increase scrutiny of its actions. Lawmakers yesterday agreed to require greater disclosure by the central bank while rejecting a provision to make the New York Fed chief a political appointee.

Geithner met with more than a dozen senators in the weeks before the Senate’s May 20 vote and urged them to support the regulatory changes. The Obama administration’s proposal, released in June 2009, included a financial services oversight council to be led by Treasury.

“What’s important is to have true accountability for the responsibilities granted to each government agency,” Treasury spokesman Andrew Williams said.

The President’s Working Group on Financial Markets, formed in response to the October 1987 stock market crash, is likely to be supplanted by the council, said Eugene A. Ludwig, chief executive officer of Promontory Financial Group and a former comptroller of the currency. The working group, led by the Treasury secretary, includes the chairmen of the Fed, SEC and Commodity Futures Trading Commission.

Insurance Office

The Treasury’s authority would also be extended to the insurance industry. A proposed National Office of Insurance, whose director would be appointed by the Treasury secretary, will identify regulatory weaknesses that could contribute to an industry crisis and recommend to the council of regulators that an insurer be supervised by the Fed.

The legislation falls short of proposing a so-called optional federal charter for insurance companies that allow firms to choose between the current system of state regulation or a federal overseer. Large insurers such as Allstate Corp. have supported an optional federal supervision while smaller firms and states oppose it.

“This is the first toe in the water for federal government into insurance,” said Robert Litan, a senior fellow at the Brookings Institution and a former Office of Management and Budget official. “It could prepare the ground for an optional federal charter.”

Inspectors

Under the legislation, the Treasury’s inspector general, or internal investigator, would lead a council of IGs from government agencies to share information that could improve financial oversight.

“The Treasury Department has been one of the primary battalions in our economic army,” Ludwig said. “In times of war the army grows in strength and authority. The question is, how will this army change in times of peace, or what it will evolve into.”

To contact the reporter on this story: Ian Katz in Washington at [e-mail].

Last Updated: June 18, 2010 11:06 EDT

www.bloomberg.com/apps/news?pid=20601087&sid=a1gUicBhBSzM&pos=4


ty momike

[sandi66]

China Central Bank Statement on Yuan Exchange Rate (Text)

By Bloomberg News

June 19 (Bloomberg) -- The following is a reformatted version of the People’s Bank of China statement on exchange-rate policy posted on the central bank’s website today.

China’s currency, the renminbi (RMB), or yuan, has been held about 6.83 per dollar since July 2008 after the government allowed a 21 percent appreciation over the prior three years.

Further Reform the RMB Exchange Rate Regime and Enhance the RMB Exchange Rate Flexibility

In view of the recent economic situation and financial market developments at home and abroad, and the balance of payments (BOP) situation in China, the People’s Bank of China has decided to proceed further with reform of the RMB exchange rate regime and to enhance the RMB exchange rate flexibility.

Starting from July 21, 2005, China has moved into a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. Since then, the reform of the RMB exchange rate regime has been making steady progress, producing the anticipated results and playing a positive role.

When the current round of international financial crisis was at its worst, the exchange rate of a number of sovereign currencies to the U.S. dollar depreciated by varying margins. The stability of the RMB exchange rate has played an important role in mitigating the crisis´ impact, contributing significantly to Asian and global recovery, and demonstrating China’s efforts in promoting global rebalancing.

The global economy is gradually recovering. The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability. It is desirable to proceed further with reform of the RMB exchange rate regime and increase the RMB exchange rate flexibility.

In further proceeding with reform of the RMB exchange rate regime, continued emphasis would be placed to reflecting market supply and demand with reference to a basket of currencies. The exchange rate floating bands will remain the same as previously announced in the inter-bank foreign exchange market.

China’s external trade is steadily becoming more balanced. The ratio of current account surplus to GDP, after a notable reduction in 2009, has been declining since the beginning of 2010. With the BOP account moving closer to equilibrium, the basis for large-scale appreciation of the RMB exchange rate does not exist. The People’s Bank of China will further enable market to play a fundamental role in resource allocation, promote a more balanced BOP account, maintain the RMB exchange rate basically stable at an adaptive and equilibrium level, and achieve the macroeconomic and financial stability in China.

Last Updated: June 19, 2010 08:41 EDT

www.bloomberg.com/apps/news?pid=20601087&sid=aOS.d3TSKgnQ&pos=2

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China Signals End to Yuan’s 23-Month Peg Before G-20 (Update2)

By Bloomberg News

June 19 (Bloomberg) -- China said it will allow a more flexible yuan, signaling an end to the currency’s 23-month-old peg to the dollar a week before a Group of 20 summit.

The decision to “increase the renminbi’s exchange-rate flexibility” was made because the economy has improved, the central bank said in a statement on its website today. It added that there is no basis for “large-scale appreciation.” The yuan’s 0.5 percent daily trading band will remain unaltered.

“China has ended its crisis-mode exchange-rate policy as the economy recovers strongly and inflationary pressure continues to build,” Li Daokui, an adviser on the People’s Bank of China’s policy board, said in an interview. “The yuan’s future trend depends on the euro’s movement, and the trends of other major currencies.”

The decision may deflect criticism of China when G-20 leaders meet on June 26-27 in Toronto and ease pressure from U.S. lawmakers, who have urged President Barack Obama to use the threat of trade sanctions to force policy change. A more flexible currency would give China more freedom to decide on monetary policy and reduce inflationary pressures by lowering import costs, the World Bank said last week in its quarterly report on the world’s fastest-growing major economy.

Yuan 12-month forwards rose the most this year yesterday, gaining 0.6 percent to 6.7081 per dollar, according to data compiled by Bloomberg. The contracts climbed 0.7 percent in the past week and reflect bets the currency will appreciate 1.8 percent from the spot rate of 6.8262. The yuan is a denomination of China’s currency, the renminbi.

Exit From Peg

“The central bank’s statement means China’s exit from the dollar peg,” said Zhao Qingming, an analyst at China Construction Bank in Beijing. “If the euro continues to remain weak, it could also mean that the yuan may depreciate against the dollar.”

Chinese authorities have prevented the currency from strengthening since July 2008 to help exporters cope with sliding demand triggered by the global financial crisis. The currency appreciated 21 percent in the three years after a peg to the dollar was scrapped in July 2005. Central bank dollar buying has left the nation with $2.4 trillion in currency reserves, the world’s largest holding.

“The global economy is gradually recovering,” the central bank said in the statement. “The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability. It is desirable to proceed further with reform of the renminbi exchange rate regime and increase the renminbi exchange rate flexibility.”

No Timetable

China’s inflation rate jumped to a 19-month high of 3.1 percent in May, higher than the government’s full-year target of 3 percent.

Today’s announcement is “a gesture to the U.S., but without a specific timetable,” said Tao Dong, a Hong Kong-based economist at Credit Suisse Group AG. “The pressure is on China now to move its exchange rate ahead of the G20 summit.”

China’s narrowing balance of payments gap indicates that there’s no basis for “large-scale appreciation” by the yuan, the central bank said in the English version of its statement. The Chinese version said no “large-scale volatility”

“Assuming there is some kind of revaluation, the fact that they’re doing it ahead of the Group of 20 meetings is good timing considering they probably would’ve been under a lot of pressure at the meetings,” said Mitul Kotecha, Hong Kong-based head of global foreign-exchange strategy at Credit Agricole CIB. “They probably believe there’s a calmer tone in markets.”

Winners, Losers

Chinese textiles makers would stand to lose the most from appreciation and some would “face bankruptcy” as their profit margins are as low as 3 percent, Zhang Wei, vice chairman of the China Council for the Promotion of International Trade, said in March. Companies focused on the Chinese market, including Beijing-based computer maker Lenovo Group Ltd. and Shanghai- based China Eastern Airlines Corp., said the same month that they would gain from lower import costs and an increase in consumer’s purchasing power.

U.S. Treasury Secretary Timothy F. Geithner on April 3 postponed an April 15 deadline for a semiannual review of the currency policies of major U.S. trading partners, which may have resulted in China being labeled a currency manipulator.

“Continued emphasis would be placed to reflecting market supply and demand with reference to a basket of currencies,” the statement said. That suggests managing the currency more with reference to a basket, said Ben Simpfendorfer, chief China economist at Royal Bank of Scotland Group Plc, in Hong Kong.

“China has to offer something ahead of the G-20,” he said. “Greater flexibility allows them the option to appreciate against the dollar, perhaps during periods of dollar weakness.”

To contact the reporters on this story: Judy Chen in Shanghai at [e-mail].

Last Updated: June 19, 2010 09:02 EDT

www.bloomberg.com/apps/news?pid=20601087&sid=aPTR0m8mvZXY&pos=1

[sandi66]

Medvedev Promotes Ruble to Lessen Dollar Dominance (Update1)

By Paul Abelsky

June 19 (Bloomberg) -- Russia wants the ruble to be one of the world’s reserve currencies as President Dmitry Medvedev renews his push to reduce the dollar’s dominance and make Moscow a global financial hub.

“Only three, five years ago it seemed like a fantasy” to create a new reserve currency, Medvedev said yesterday in a speech in St. Petersburg, Russia. “Now we are seriously discussing it.”

Medvedev, who has repeatedly called for a supranational currency to match the dollar, said discussions with China are continuing on broadening the global options. Russia sold U.S. Treasuries for a fifth consecutive month in April, the U.S. Treasury Department said June 15. The world may need as many as six reserve currencies, Medvedev said.

“It’s something that’s obviously needed,” he said at the St. Petersburg International Economic Forum. “Developing a financial center in Moscow will considerably help to strengthen the ruble’s position as one of the reserve currencies.”

Reasserting Power

Medvedev’s comments underline Russia’s ambition to reassert its global power following the financial crisis. Gross domestic product shrank 7.9 percent last year, the worst contraction since the fall of communism in 1991, after the credit crunch sent commodity prices plunging.

If a country wants to alter the world economic order, including the number of reserve currencies, it must become an international financial center, Bank of Israel Governor Stanley Fischer said in an interview yesterday.

“For a currency to be a reserve currency, you have to have capital markets in which you can sell it and buy it very easily,” Fischer said. “New reserve currencies don’t emerge by fiat. They emerge as countries change.”

The ruble and the yuan may by 2015 be added to the basket of currencies that set the value of International Monetary Fund units called special drawing rights, Goldman Sachs Group Inc. Chief Global Economist Jim O’Neill said. O’Neill coined the BRIC term in 2001 to describe the four nations -- Brazil, Russia, India and China -- that he estimates will collectively equal the U.S. in economic size by 2020.

Free Float

The ruble “has as many reasons to be in it as the pound,” he said today in an interview in St. Petersburg. “If Russia really wants to be in it, it’s got to allow people to use it all over the world.”

Allowing the ruble to trade freely is “very important,” O’Neill said.

“Inflation targeting is key,” he said. Without a shift to an inflation targeting regime, the ruble “isn’t going to be part of the SDR. You can’t have it both ways, really, unless the Chinese change the rules, which they might do by the end of this decade. China is going to be so big.”

Russia may “come very close to floating the ruble” in the course of one year to 18 months, Bank Rossii Chairman Sergei Ignatiev said in April. Even so, the central bank doesn’t need to take on legal obligations to stop intervening in the currency market, he said.

Yuan Flexibility

The People’s Bank of China today said it will allow more yuan exchange rate flexibility and reform of the exchange-rate mechanism as the nation’s economic recovery has “cemented” after the global financial crisis.

Medvedev said he envisages a new economic hierarchy allowing emerging-market giants such as Russia and China to drive the global agenda as the world emerges from the first global recession since the 1930s.

“We really live at a unique time, and we should use it to build a modern, prosperous and strong Russia, a Russia that will be a co-founder of the new world economic order,” he said.

The BRIC countries were net sellers of U.S. assets in April, driven mainly by Russian divestments, Brown Brothers Harriman & Co. Senior Currency Strategist Win Thin said in a June 15 note.

Russia may add the Australian and Canadian dollars to its international reserves as the central bank diversifies the world’s third-largest stockpile away from the greenback, central bank First Deputy Chairman Alexei Ulyukayev said in a June 16 interview.

Though Russia is “very carefully monitoring what’s happening in the euro zone,” the emergence of the euro as a currency to rival the dollar’s dominance helped soften the impact of the global crisis, Medvedev said.

“If the world depended completely on the dollar, the situation would have been more difficult,” Medvedev said.

To contact the reporter on this story: Paul Abelsky in St. Petersburg at [e-mail]

Last Updated: June 19, 2010 09:07 EDT

www.bloomberg.com/apps/news?pid=20601087&sid=aPd0YnupJiyY&pos=4

[sandi66]

Treasuries Gain on Outlook for Low Inflation, Employment, Rates

By Susanne Walker

June 19 (Bloomberg) -- Treasuries rose, pushing 10-year yields near the lowest since the week ended May 15, 2009, on speculation weak employment and subdued inflation will persuade the Federal Reserve to keep interest rates at a record low.

Ten-year notes pared their five-day gain yesterday as concern eased that Europe’s debt crisis would worsen. U.S. data earlier showed consumer prices declined, housing starts dropped and unemployment claims rose, fueling demand for the safety of government bonds. The Treasury will sell $108 billion in shorter-term notes next week, $5 billion less than last month.

“You’ve got weaker data, and people are starting to question where the economy is right now,” said Richard Volpe, co-head of interest rates in Stamford, Connecticut, at Royal Bank of Scotland Group Plc, one of 18 primary dealers that trade with the U.S. central bank. “In this environment, we don’t expect to hear anything out of the Fed.”

The 10-year note yield fell 2 basis points, or 0.02 percentage point, to 3.22 percent, according to BGCantor Market Data. It was 3.20 percent on June 4, the lowest weekly close in almost 13 months. The 3.5 percent security due May 2020 rose 3/32, or 94 cents per $1,000 face amount, to 102 11/32. The two- year note yield fell 2 basis points to 0.71 percent.

Treasuries gained even as stocks rose for the week on prospects for greater stability in Europe, with the Standard & Poor’s 500 Index advancing 2.4 percent and the MSCI World Index climbing 3.2 percent.

Prices, Jobs

The consumer price index declined 0.2 percent in May, the biggest drop since December 2008, data from the Labor Department showed on June 17. Initial claims for jobless benefits unexpectedly rose to 472,000 for the week ended June 12, the department said. Economists in a Bloomberg survey forecast a slide to 450,000. Housing starts fell 10 percent in May, the biggest tumble since March 2009, Fed data showed on June 16.

The difference in yields between 10-year Treasury Inflation-Protected Securities, or TIPS, and comparable conventional notes showed money managers expect the consumer price index to increase an average 2.02 percent a year in the next decade, down from 2.41 percent at the end of 2009. The gap touched 1.83 percent on May 21, the narrowest since Oct. 9.

All 90 economists in a Bloomberg News survey forecast that U.S. policy makers will hold the benchmark interest rate at a record low range of zero to 0.25 percent, where it has been since December 2008, at the end of a two-day meeting on June 23.

‘Fed on Hold’

“The drumbeat of the Fed on hold deep into 2011 is attracting more votes among investors,” Jim Vogel, head of agency-debt research at FTN Financial in Memphis, Tennessee, wrote in a note to clients. “More capitulated on the combination low-inflation, slow-employment grind signals.”

Futures on the CME Group Inc. exchange yesterday showed a 77 percent chance the Fed will maintain or cut interest rates by its December meeting, up from 62 percent a month earlier.

The central bank reiterated on April 28 at the end of its last policy meeting that it intended to keep the rate near zero for an “extended period” to help spur economic recovery.

“There’s no risk in any language change at this particular meeting, coming on the heels” of the debt crisis in the European Union, said David Ader, head of government bond strategy at Stamford, Connecticut-based CRT Capital Group LLC.

The Treasury will auction $40 billion in 2-year notes, $38 billion in 5-year securities and $30 billion in 7-year debt in successive daily sales that begin on June 22, the department said on June 17. That compares with offerings of $42 billion, $40 billion and $31 billion of the notes last month. Next week’s total is the lowest for sales of the notes since June 2009.

‘Heavy Lifting’ Done

Matthew Rutherford, the Treasury’s deputy assistant secretary for federal finance, said earlier this year the department was confident the “deficit situation” would improve and that auction sizes had reached their peak. “The heavy lifting is done,” he said at a Feb. 3 press conference.

U.S. securities are set for their best first half in a decade. Treasuries have returned 4.5 percent since Dec. 31, heading for the largest gain in the first six months of a year since 2000, Bank of America Merrill Lynch indexes show.

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., boosted holdings of U.S. government-related debt to the highest level in six months.

The $227.9 billion Total Return Fund’s investment in the debt was increased to 51 percent of assets in May, from 36 percent the previous month, according to the website of Newport Beach, California-based Pimco.

Treasuries, part of the government-related category, are the premier holdings for fixed-income investors with the U.S. economy failing to produce private-sector jobs and Europe’s sovereign-debt crisis threatening the region’s banking sector, Gross, 66, said this month.

European policy makers, striving to keep the region’s sovereign debt crisis from accelerating, last month unveiled a rescue package worth almost $1 trillion. Investors speculated this week that stress tests the EU said it will publish will show that Europe’s banks are robust.

To contact the reporter on this story: Susanne Walker in New York at [e-mail]

Last Updated: June 19, 2010 00:00 EDT

www.bloomberg.com/apps/news?pid=20601087&sid=a7rCgvG6yhBg&pos=5

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Medvedev Says He Cannot Rule Out Collapse of Euro

June 19, 2010

Russian President Dmitry Medvedev says he can’t rule out the collapse of the euro as the European Union struggles to contain the sovereign debt crisis.

Asked if the emergency could threaten the single currency, Medvedev said, “So far, no. But one cannot rule out this danger because at least a unique situation has emerged,” according to the text of an interview with the Wall Street Journal that was provided by the Russian government.

Russia will help lead the effort to recast the world economic hierarchy after the global financial crisis, Medvedev said today at the St. Petersburg International Economic Forum. The government will use tax incentives and other free-market economic policies to attract investment, he said, as Russia seeks to diversify its economy away from natural resources.

“We really live at a unique time, and we should use it to build a modern, prosperous and strong Russia, a Russia that will be a co-founder of the new world economic order,” Medvedev told an audience that included Citigroup Inc. Chief Executive Officer Vikram Pandit and French Economy Minister Christine Lagarde.

Medvedev, 44, travels to the U.S. next week for talks with U.S. President Barack Obama before heading to Canada for a meeting of the Group of 20 nations. The Wall Street Journal interview touched on issues ranging from the BP Plc oil spill in the Gulf of Mexico to Iran and recent violence in Kyrgyzstan.

BP Concerns

The Russian president suggested the oil spill, which forced London-based BP to set aside $20 billion for potential damages, could lead to the breakup of the company and said he wanted to make sure the interests of Russian shareholders in TNK-BP are safeguarded, according to the interview text. TNK-BP, which accounts for almost a quarter of BP’s output, is half-owned by Russian billionaires, including Viktor Vekselberg.

“How they will be able to digest these losses, whether it will lead to annihilation of the company itself, to its break up, this is a feasibility issue,” Medvedev said of BP. “We would like, speaking frankly, the interests of Russian investors that created a joint business with BP to somehow be ensured.”

Medvedev backed the sanctions against Iran that were passed by the UN Security Council on June 9. The measures, which call for a tighter arms embargo, authority to seize cargo that could be used in nuclear weapons, and restrictions on financial transactions with Iran, represent a balanced approach, he said.
“The sanctions that have been imposed are strict enough, yet at the same time they do not harm the Iranian people,” Medvedev said in the interview. “They may push the Iranian leadership to, at some point, take a decision on closer cooperation with the global community” and the International Atomic Energy Agency.

‘Unilateral Sanctions’

The U.S. and EU have further than the UN resolution, with European leaders approving penalties that target the oil and gas industry, including the prohibition of new investment, technical assistance and technology transfers.

“Unilateral sanctions, be it U.S. sanctions or those of the EU or any other countries, would worsen the situation because they are not agreed upon with anyone,” Medvedev said.

Medvedev also said that the U.S. air base in Kyrgyzstan, a key installation for American operations in Afghanistan, should be closed down once its job is done.

Kyrgyzstan, a former Soviet republic, has been the scene of sporadic violence since April, when President Kurmanbek Bakiyev was ousted and replaced by an interim government. At least 189 people have died in fighting between Kyrgyz and Uzbek groups in the Central Asian nation over the past seven days.

If the base “is needed for fighting terrorism, for bringing order, then OK,” Medvedev said. “But it is obvious, and it is my position and I speak openly about it, that it should not exist forever. It should, in my opinion, resolve concrete tasks and complete its work.”

beforeitsnews.com/news/81/802/Medvedev_Says_He_Cannot_Rule_Out_Collapse_of_Euro.html

[sandi66]

UPDATE 2-US' Geithner says test is how much China yuan moves


Sat Jun 19, 2010 1:42pm EDT* Calls currency move an important step

Currencies | Bonds | Global Markets

* Says test is how far, fast currency moves

(Recasts with fresh Geithner comment)

WASHINGTON, June 19 (Reuters) - U.S. Treasury Secretary Timothy Geithner welcomed China's decision on Saturday to make its yuan exchange rate more flexible, but said "the test is how far and how fast they let the currency appreciate."

China's central bank said it will gradually make the yuan's exchange rate more flexible, indicating that it was ready to break a 23-month-old dollar peg that has come under intense criticism from the United States and other countries.

"We welcome China's decision to increase the flexibility of its exchange rate," Geithner said in a statement.

"Vigorous implementation would make a positive contribution to strong and balanced global growth. We look forward to continuing our work with China in the G20 and bilaterally to strengthen the recovery."

The People's Bank of China all but ruled out the one-off revaluation or major appreciation hoped for by critics, saying there was "no basis for big fluctuations or changes" in the exchange rate.

The move comes before a Group of 20 leaders summit in Toronto next week, where U.S. President Barack Obama and others were expected to increase pressure for a yuan move. By shackling the yuan to the dollar, U.S. lawmakers and manufacturers say Beijing has gained a trade advantage that costs U.S. jobs.

Geithner had taken a softer approach toward China on the yuan exchange rate, delaying a Treasury Department report on whether China manipulates the value of its currency. Such a finding would trigger negotiations with China involving the International Monetary Fund and could lead to punitive trade sanctions.

But with Congress growing impatient and threatening trade legislation aimed at the yuan, Obama this past week ratcheted up his rhetoric on China's foreign exchange rate policies, telling his G20 colleagues in a letter that free-floating currencies were essential to global economic activity.

www.reuters.com/article/idUSN1919753920100619

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Roach, O’Neill Say China Yuan Move Shows Confidence in Recovery

By Gopal Ratnam and Timothy R. Homan

June 19 (Bloomberg) -- China’s decision to allow a more flexible yuan shows the country’s leaders are convinced the world economic rebound is durable, said economists Stephen Roach and Jim O’Neill.

“This move is a vote of confidence in the global recovery,” Roach, Chairman of Morgan Stanley Asia Ltd. said in a e-mail. “Markets are going to like” the decision, said Jim O’Neill, chief global economist for Goldman Sachs Group Inc.

China’s central bank said the decision to “increase the renminbi’s exchange-rate flexibility” was made after the world’s third-largest economy improved. Chinese authorities had prevented the currency from strengthening since July 2008 to help exporters cope with sliding demand triggered by the global financial crisis.

The announcement may help restore investor confidence shaken by the European debt crisis, O’Neill said in an interview in St. Petersburg, Russia.

“It could be that China is doing its bit to rescue the world markets,” he said. “It may allow for attention to be diverted from the obsession with the European monetary union and the sovereign currencies in Europe.”

China’s decision, a week before Group of 20 leaders meet in Toronto to consider ways to safeguard the economic recovery, may deflect criticism that its undervalued currency has added to lopsided global flows of trade and investment. The announcement signals an end to the currency’s two-year-old peg to the dollar.

‘Not a Panacea’

Even so, Roach said the shift “is not a panacea for an unbalanced global economy.” Countries such as China with trade surpluses will have to take steps to stimulate private demand, he said, while countries such as the U.S. “need to show a credible commitment to fiscal consolidation and take actions that would boost personal saving.”

The People’s Bank of China ruled out a one-time revaluation, saying there is no basis for “large-scale appreciation,” and kept the yuan’s 0.5 percent daily trading band unchanged. The yuan is a denomination of China’s currency, the renminbi.

The currency appreciated 21 percent in the three years after a peg to the dollar was scrapped in July 2005 and replaced by a managed float against a basket of currencies including the euro and the Japanese yen.

China’s announcement could be seen as a signal that the “worst of the financial crisis is over, China is growing very strongly, that this is an auspicious time to go back to the policy that had initially been announced,” Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, said in a telephone interview with Bloomberg News.

Gains Unclear

Lardy said it’s unclear how much the currency will be allowed to strengthen.

“I think if they had in mind some indication of a specific amount, they might have announced that today. I would not anticipate a second announcement; the markets are just going to see.”

O’Neill predicted the yuan will appreciate 1 percent when markets open June 21 and predicts a 5 percent appreciation by year’s end.

Chinese exports have helped drive growth in the world’s third-largest economy.

China’s overseas sales jumped 48.5 percent in May from a year earlier, the biggest gain in more than six years. Exports exceeded imports by $19.5 billion, from $1.68 billion in April and a deficit of $7.24 billion in March that was the first in six years.

Increasingly Confident

“The Chinese are increasingly confident they can make this adjustment to a domestic-driven economy rather than the one relying on exporting low-value-added stuff to the rest of the world,” O’Neill said.

It remains to be seen if China’s decision is a “symbolic move or a true shift in China’s currency policy that will result in significant currency appreciation,” Eswar Prasad, a senior fellow at the Brookings Institution in Washington and a former IMF economist, said in an e-mail.

Still, “this move signifies recognition by Chinese officials that a more flexible exchange rate is in China’s own interest,” Prasad said.

Changes in China’s exchange rate may not have an impact on the bilateral trade balance, John Frisbie, president of the U.S. China Business Council said in an e-mail.

“Much of what we import from China is stuff that we imported from elsewhere before,” Frisbie said. “If we didn’t import it from China, we’d likely just import it from somewhere else.”

To contact the reporter on this story: Timothy R. Homan in Washington at [e-mail] Ratnam in Washington at [e-mail].

Last Updated: June 19, 2010 17:52 EDT

www.bloomberg.com/apps/news?pid=20601087&sid=a2KICHel.b5E&pos=4

[sandi66]

JUNE 19, 2010, 5:53 P.M. ET

UK Treasury: China Yuan Step Major Contribution On Imbalances

LONDON (Dow Jones)--The U.K. government on Saturday welcomed China's decision to allow its currency to appreciate, saying it is an "important contribution" to tackling global imbalances.

"We welcome this announcement by the Chinese authorities," a treasury spokesman said.

"Its implementation should make an important contribution to the rebalancing of global demand, in line with the commitments made by all G20 countries."

Earlier Saturday, China pledged to make its tightly controlled exchange rate more flexible. The People's Bank of China statement didn't announce any specific changes to the exchange-rate regime, but it was seen as a clear signal that China will let the yuan resume a gradual rise against the U.S. currency-possibly as soon as Monday-after nearly two years of being effectively pegged around 6.83 yuan per dollar.

The new U.K. government had sought to tread softly on the China currency issue since it took office last month.

On a recent trip to China, Chancellor of the Exchequer George Osborne said the issue of the yuan's level should be dealt with in the broader international context of tackling global imbalances.

The spokesman said the U.K. government is seeking to play its part in reducing inbalances by "making growth more sustainable in the future" by tackling the budget deficit and making reforms to the financial sector.

-By Laurence Norman, Dow Jones Newswires; [e-mail]

online.wsj.com/article/BT-CO-20100619-701147.html?mod=WSJ_latestheadlines

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JUNE 19, 2010, 3:47 P.M. ET

Global Leaders Welcome China's Yuan Plan

Financial and political leaders world-wide hailed China's plans to press ahead with reforming its exchange rate.

Saturday's Chinese central-bank statement, issued ahead of a meeting of the Group of 20 economies next week, didn't announce specific new measures. But it is widely being interpreted as meaning that China will let the yuan resume gradual appreciation against the U.S. currency, after nearly two years of being effectively pegged around 6.83 yuan per dollar.

"We welcome China's decision to increase the flexibility of its exchange rate," U.S. Treasury Secretary Timothy Geithner said in a prepared statement shortly after the announcement by the People's Bank of China. "Vigorous implementation would make a positive contribution to strong and balanced global growth."

Japanese Finance Minister Yoshihiko Noda offered a similar reaction. "I hope this will contribute to stability and balanced growth in the Chinese, Asian and therefore global economies," Mr. Noda said in a statement released by the finance ministry.

Meanwhile, the European Union's executive arm said the decision would generate positive effects for the countries that use the euro. "The decision will help achieve more sustainable growth in the global economy, contribute to reduce external imbalances and strengthen the stability of the international monetary and financial system," the European Commission said in a written statement.

Dominique Strauss-Kahn, the managing director of the International Monetary Fund, also welcomed the news, saying a stronger Chinese currency "will help increase Chinese household income and provide the incentives necessary to reorient investment toward industries that serve the Chinese consumer."

Beijing's move may not, however, result in a large appreciation of the yuan. Cornell University economist Eswar Prasad, former head of the International Monetary Fund's China division, cautioned that Beijing is returning to a policy of linking the yuan to a basket of currencies, without identifying the composition of the basket.

About a quarter of China's trade is in euros, a currency that has been in a steep slide against the dollar recently. If the euro composes a large share of China's invisible basket, the yuan could actually weaken relative to the dollar, Mr. Prasad warned.

"If the world now says, 'Let your currency float against the dollar,' the Chinese could say, 'Do you really want it to depreciate?' " Mr. Prasad said, describing Beijing's move as "canny."

Mr. Prasad said China's main concession was therefore not the content of its new policy, a return to the one that was in place before the global financial crisis. Rather, Beijing's principal shift was in the timing, offering at least a symbolic gesture ahead of the summit in Toronto next weekend of leaders from the Group of 20 major industrialized and emerging economies.

"They've actually accomplished two significant objectives," Mr. Prasad said. "They''re taking away the political heat, but without significantly affecting their export competitiveness."

China's announcement gives the Obama administration at least some breathing room, too. U.S. President Barack Obama, like his predecessor President George W. Bush, is under pressure from Capitol Hill to somehow persuade China to allow the yuan to rise. Many in industry and Congress say the weak yuan makes it harder for American companies to compete with Chinese firms. The administration is convinced that China must do something—including allowing a stronger yuan—to increase its consumption of imported goods and services and reduce its reliance on politically sensitive exports. Such a shift could help reduce the U.S. trade deficit.

The Chinese alerted the Obama administration early Saturday, shortly before making the decision public.

In April, Mr. Geithner delayed issuance of Treasury's twice-yearly report on international currency practices to avoid putting too much public pressure on China ahead of high-level economic meetings in Beijing last month and the G-20 summit.

At the time, Mr. Geithner warned the Chinese privately that if they didn't take significant steps to let the yuan strengthen, he would likely use the report to accuse Beijing of manipulating the yuan to gain an edge in international trade. Such a declaration wouldn't have carried any penalties, but is a rhetorical step the U.S. and China have long wanted to avoid.

A few weeks later, Mr. Geithner visited China after a trip to India, and he came away convinced that Beijing was moving toward some action on the currency issue.

Now Mr. Geithner is free to issue a report complimentary of China—or at least not harshly critical of it—without risking as much backlash from Capitol Hill.

With Mr. Obama's Democratic Party facing tough midterm elections in November, however, the political heat could rise again if Beijing's new policy doesn't actually result in a strong yuan in the coming months, Mr. Prasad said.

Indeed, one of the Beijing's sharpest congressional critics, Sen. Charles Schumer, a New York Democrat, issued a statement Saturday calling China's announcement "vague and limited."

"Until there is more specific information about how quickly it will let its currency appreciate and by how much, we can have no good feeling that the Chinese will start playing by the rules," Mr. Schumer said.

"China's announcement is long overdue," said. Senator Chuck Grassley (R., Iowa), ranking Member of the Committee on Finance. He added that lawmakers would continue to urge the administration to keep pressure on China until it takes "concrete actions to appreciate its currency exchange rate in a meaningful way."

Sen. Max Baucus (D., Mont.), another vocal critic of China's currency policy from his post as chairman of the Senate Finance Committee, offered a slightly softer tone than Mr. Schumer. But he, too, stressed the importance of seeing Beijing turn stronger words into a stronger yuan.

"Today's announcement is a welcome first step to help keep American businesses competitive and create more American jobs," Mr. Baucus said in a written release. "However China's currency appreciation must be meaningful to ensure American ranchers, farmers and small businesses are competing on a level playing field in the global economy."

Morris Goldstein, a senior fellow at the Peterson Institute for International Economics, said the announcement will deflect criticism ahead of the G-20, buying time as officials wait to see how Beijing's rhetoric is proven in practice.

"I wouldn't really expect big changes that have large effects," Mr. Goldstein said.

In the past, China's currency appreciation hasn't been very dramatic. For example, Mr. Goldstein calculates that Beijing only raised its rate by around 7% in two years—adjusted for inflation—between 2005 and 2007.

—Andrew Batson and Matthew Dalton contributed to this article.

online.wsj.com/article/SB10001424052748704365204575316512609162050.html?mod=WSJ_Markets_LeadStory

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Canada’s Harper Welcomes China Decision on Currency Flexibility

June 19, 2010, 5:52 PM EDT

June 19 (Bloomberg) -- Canadian Prime Minister Stephen Harper today said he welcomed China’s announcement that it will allow more flexibility in its currency, calling it “an important step forward.”

In an e-mailed statement, Harper said that full implementation of the increased flexibility would “contribute to strong, sustainable and balanced global growth.” Harper also said he is looking forward to “additional steps by G-20 countries at the Toronto summit to improve the economic prospects of all of our citizens.”

Harper will host a meeting of leaders from the Group of 20 nations June 26-27 in Toronto.

To contact the reporter on this story: Paul Badertscher in Ottawa at [e-mail]

www.businessweek.com/news/2010-06-19/canada-s-harper-welcomes-china-decision-on-currency-flexibility.html