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JP Morgan tries to squirm

Too Big to Fail

When this Facebook movie guy wrote this book and I started looking forward to his dealbook blog in the other direction in June 2008, I was just leaving my employment with IBM, sure that there was no doomsday to follow unless everything broke down at once and I never got another job even in home grounds of Bangalore, I had already published the recession and the commentary in my analyst reports on Banking and those by my virtual MI team tracking the O&O industry which I realized I had harbored a little longer than necessary.

However if you read Too big to fail and see Dick Fuld and Jamie Dimon’s actions over that weekend we were all tracking the same and Dimon by action and knowledge had scored his first winning act. In the same breath he had his team and Cazenove draw up new UK HQ plans, which I definitely did not believe would come thru in Sept 2008. It is still unraveling, a deal that had got him City property (Canary Wharf) at a GBP 1000 a sq ft and that is still 2.5 times higher than the new building in Dubai

Jamie Dimon is the right man in the right place and I am ready to pay someone for a chance to take his job and play it 9 to 5. I need a job too. The point being that Jamie Dimon knows that he has won the round that started with Hank Greenberg’s cleansing from AIG, Hank Paulson’s enthroning and the consequent unraveling. The takeaways, we haven’t really moved forward, LTCM will happen again, AIG will ne’er pay up its insurance and new regulation will not be easily absorbed because it is being pushed the wrong end in.

The bankers are enjoying the show, because the regulators have it wrong. And the second wrong however will solve a lot of problems of time on the park bench for a million and more that lost jobs every month in 2008 and 2009. and it will pay the bankrupt governments a few pennies. I love the very thought of a 50% tax on bonuses because it is an enriching and enabling thought. The banks and regulators have to work together and I’m assuming all the carpets the regulators were spreading on backup documents were dusted by the bankers and hence so less of regulatory progress and such extreme thoughts. But in a callous and strange way it solves the problem and shuts up the game. The whole thing has happened so smoothly that unless a few bitter pills are swallowed, carpets will be ripped out every fortnight, every month. No PE funds are going to buy AIG’s distressed blue chip debt let alone Life Insurance and Aircraft leasing engines unless facts are bared afresh.

However, one feels for the poor beings at JP Morgan and Goldman Sachs, after all I would still think I would like to be like one of those winners. They should not mind paying the tax on both sides of the Atlantic and Obama is well of the right mind to do that too!

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Where the Infrastructure Dollar went?

2009 was the year of the stimulus for the US. Though the Capitol talked mostly only about stimulus in terms of funds for highways and on setting up of recovery.gov, We started taking notice by June that indeed it was hard to track and hard to estimate..a lot of state and some police projects were awarded at the level of county and job savings ascribed to each to get to recovery.gov. Not entirely accurate but definitely a notch or two better than any other spending program i know. The rest of the jobs program will be best utilised probably by the same jobs..new roads, highways that needed even just guard rails, railway infrastructure.

In February, Obama made whistle-stop tours and exhorted the people to see how much they needed these highways and bridges, and how these were unfinished business:

Mr. Obama is proposing what he says is the largest increase in infrastructure spending since President Dwight Eisenhower created the Interstate Highway System in the 1950s.

“We will invest more than $100 billion and create nearly 400,000 jobs rebuilding our roads, our railways, our dangerously deficient dams, bridges and levees,” he said.

The president said funding infrastructure projects will also help create jobs in other areas of the economy. He specifically mentioned the Caterpillar company, which makes much of the heavy equipment used in road projects. Caterpillar recently announced more than 20,000 layoffs.

“And today, the Chairman and CEO of Caterpillar said that if the American Recovery and Reinvestment Plan passes, his company would be able to rehire some of those employees,” he said.

via VOA

By July, we were comparing dollars at each city:

Track These At Recovery.Gov In Time | NY Times

The NY Times story here was obviously received well because of the graphics and the comparative data, much of which may need to be reworked now. A look at recovery.gov shows 40-45% of the funds being drawn by county programs such as the 11921 awards in California, mostly grants and around 10% ($1.3 billion ) in contracts, going to police stations buying LCD Flat screen TVs and Crowd Control System upgrades, waste water collection systems, increase health center services and presumably the roads, bridges and the highways.

Out of the $158.7 billion awarded ( 58%) 13% has been received and more can probably be done now in receiving those funds and working out what is wrong with the process.

Nonetheless, many in the developing world and even Europe could also use the recovery.gov example to start cleaning the Augean stables of public works. Well begun is half done. But with only 12000 jobs related in Arizona and jobs being reported in fictional districts, well..someone needs to figure out what is wrong and fix it. Similarly Texas has only reported 20000 jobs created and the country as a whole is already reporting 600000 jobs created by the stimulus..obviously not going to match with the rising unemployment numbers..and i haven’t heard from any of these folk on twitter..strange?

In California, almost 45% has been allocated by the Department of Education ( 8 out of 18 billion )  and more than 15% to the Department of Transportation – Have people really seen these half a million jobs making a difference? Have these funds to school districts saved the schools or the teachers? There however the reports are still missing, probably dwarfed by the enormity of the task involved

An example of the agency wise allocation is in the included screen grab for Alabama on the right. It is a great time for people at these agencies to get back with the results. America needs it before going on another joyride with public funds. If you go by these statistics the journos at Reuters have done a pretty ‘funny’ piece with the stats

The second stimulus program may just be going the wrong way without a detailed success/failure report on the first one.

The new Jobs program

The “Jobs for Main street” , Whitehouse’s own repartee to the Wall street cats, is equally unrepentant getting another $40 billion for Department or Transportation, to teach us the ‘new deal’ all over again. The ARRA year has gone by and we are still thinking about another set of roads that will be up in ‘120 days’. I thought the overwhelming majority passed it because it was creating jobs? Especially now with the shadow inventory showing, it is time to tread a little cautiously and on sure footing not ‘sidings and tarpools’ The ARRA bill already has 7886 transportation projects underway.

An example of others who could have got the money is below from The Huffington Post

Demand for high-speed rail funding has well exceeded the expectations that existed when the recovery bill was signed last year. Currently, there are close to $60 billion in project applications from more than 30 states competing for the first $8 billion in federal high-speed rail funding, which will go out in a few months. Domestic and foreign investors and private industry have taken notice of the government’s initiative and the sector has exploded over the last few months, providing hope for new employment that can offset the massive losses in the automotive industry. All eyes are on Congress to see if they will follow through on the initial down payment in their next major transportation spending bill.

Jobs are being lost every month even two years after the recession began. While the number has stopped growing very fast, the number of jobs lost is growing every month without fail. These businesses cannot just wait for banks to start lending, and pretty soon we are going to be out of money to print.  We were losing more than 600,000 jobs every month just a few weeks back. This recovery will take much longer than in the Asia and Latam markets. The unemployment rate is still above 10% even after November showed up a huge improvement to just 11000 lost jobs ( just Kentucky lost 5000 out of this!) 15.4 million are still looking for work hopelessly stuck with a lasting unemployment with even the limited foreign worker visas going unrequited in this situation. The long term unemployed, looking for work for more than 6 months are a good 38.3% of the unemployed, another record for America.

More foreclosures

Thousands Of New York Area Home Owners Attend Mortgage Modification Event

Even as dismal numbers from the loan modification program caused an extension of the program till October 2010 ( see Geithner extends TARP) the latest shadow inventory nos ( detailing foreclosures shocked the nation with 1.7 million available for sale from foreclosures. St Louis got an award for 800 modifications to save homes from foreclosure! There seems to be no comparison between the two figures, and more is required than depending on just road construction to make new jobs

Probably some of the economists at Obama and Biden’s offices are already at work untangling the confusion of the stimulus and getting ready to tell us what has worked. I think it’s time.

Citi fizzles out in end 2009 bid

Repayment week came a cropper as Citibank found a lukewarm market waiting for its sale to raise the $20 billion to repay. It seems Vikram Pandit’s team failed to do the required homework before declaring its ambitious calendar and lacked the skills to judge the market conditions right for its sale. All the meetings Vikram Pandit had been having with the Treasury came a cropper on a day that mysteriously coincided with Obama’s call to the bankers.

The market does nt ignore such folly. All insider trading and information based decisioning apart, the market first and foremost reads market information and that information now puts Citi and AIG in the same league. Both will now be assessed with a lack of direction and difficulty in reading its stakeholders because of a simple public fracas. I mince no words when I say that they could now be treated worse than an Accenture cuddling Tiger woods a week after the man destroyed his marriage.

This is a setback for the entire recovery mechanism and a symptom of the misreading that afflicts the Geithers, Benmoshes and the Pandits

Even a Hongkong market could raise over $50 billion but you came out with an offer no one wanted for Citi. Sounds like, Citi is no better than one of the 133 banks that have failed in the US this year. This cannot be compared to the Mortgage meltdown or made a part of it. It needs a new chapter by itself. We all suffer for such fools though the gimmer of hope is that now no one cares when an AIG or Citi breaks the buck and the markets go on with better picks. It’s a shop like any other..In fact in pstate Des Moines in Iowa, the schools and the lake planes are all fine. The Ski resorts are doing big business too. And Dubai is back. Azerbaijan has a sovereign wealth fund. What about the new oil and mineral deposits south of Brazil and in the dense African safari..

Tortoise wins race for best U.S. city for business – MarketWatch

It’s no fluke in the pan either. Spokane (WA), Phoenix (AZ) and Boise(ID) have been consistent scorers, because you can get the same quality of life for much less than a crushing load on your pockets. And your favorite banks and ATMs have not been taken down either. Your favourite super retailers are there right till Nordstrom, I’d say do it now. Figure out where you want to live in that new pay cap, and your office will do it for you. Come to Iowa, Come to Nebraska. Come in your own plane. That is why your bonus is in the best stock you could own, your employer. Try it!

We all know the fable of the tortoise ultimately winning his painstakingly measured race against the hare.

Apply that to today’s economy and it’s relatively easy to come up with a winner for MarketWatch’s third survey of the best U.S. cities for business. This year’s victor is the subdued terrapin of regional economies: Des Moines, Iowa — population 556,230.

via Tortoise wins race for best U.S. city for business – MarketWatch.

Repayment week Dec 9-14 | Dealbook blog

The banks are done with all the help planned for them since 08..here’s just the last 3 days. Reforms will establish a new normal for us bankers..Wells Fargo, Citi, BofA all return the stash , saving on interest, The J P Morgan auction and ING

INVESTMENT BANKING

Wells Fargo to Repay $25 Billion in TARP Money

December 14, 2009, 6:33 PMWells Fargo said Monday evening that it would repay the entire $25 billion that it received in the government’s bailout last year. It said some of the money would come from a $10.4 billion stock sale.

Bank of America, Citigroup, TARP, Treasury Department, Wells Fargo

INVESTMENT BANKING

Another View: Redefining How to Repay TARP

December 14, 2009, 11:42 AMThe government must reexamine the standards by which banks can repay the billions of dollars they received under the Troubled Asset Relief Program, an architect of the financial bailout writes in Another View.

Bank of America, Citigroup, David Nason, Goldman Sachs, Henry Paulson, J.P. Morgan Chase, State Street, TARP, Timothy F. Geithner, Troubled Asset Relief Program (2008), Wells Fargo

INVESTMENT BANKING

In JPMorgan Auction, U.S. Made the Right Choice

December 14, 2009, 10:00 AMDid the federal government get a better deal by auctioning off its warrants in JPMorgan Chase to private investors instead of letting the bank buy them back?

Bank of America, Citigroup, Goldman Sachs, J.P. Morgan Chase, Old National Bancorp, TARP, Treasury Department

INVESTMENT BANKING

Citi’s Internal Memo on Repaying Bailout Money

December 14, 2009, 7:28 AMDealBook has obtained Citigroup’s internal memo to employees about its deal to repay $20 billion of bailout money.

Citigroup, TARP, Treasury Department

INVESTMENT BANKING

Citi Strikes Deal on Bailout

December 14, 2009, 7:00 AMCitigroup was close to a deal on Sunday night to be the last of the big Wall Street banks to exit the government’s bailout program, after trying to persuade regulators that it was sound enough to stand on its own.

Citigroup, F.D.I.C., PNC Financial Services Group, TARP, Treasury Department, Wells Fargo

INVESTMENT BANKING

N.Y. Mellon Chief Said to Be in Lead for BofA Post

December 14, 2009, 5:45 AMBank of New York Mellon’s chief executive, Robert Kelly, is the front-runner to succeed retiring Bank of America chief Kenneth Lewis, but compensation issues could get in the way of a deal, The Wall Street Journal reported.

Bank of America, Bank of New York Mellon, Robert Kelly

PRIVATE EQUITY

Terra Firma Said to Seek Investors in EMI

December 14, 2009, 4:54 AMBritish private equity group Terra Firma wants to bring in outside investors to help prop up music company EMI Group, which is struggling with $4.2 billion of debt, The Observer reported.

Citigroup, EMI Group, Terra Firma

PRIVATE EQUITY

Abu Dhabi Gives Dubai $10 Billion

December 14, 2009, 4:35 AMAbu Dhabi, the oil-rich governing emirate of the United Arab Emirates, surprised investors on Monday by pledging to provide $10 billion to Dubai, easing fears about an outright debt default by the smaller, struggling emirate.

INVESTMENT BANKING

ING Will Repay $8.3 Billion in Aid Early

December 11, 2009, 6:21 AMThe Dutch financial services group ING, which came close to collapse last year, said Friday that this month it would repay half of the 10 billion euros provided by the government during the height of the financial crisis.

LEGAL

Geithner Sees ‘Headwinds’ on Road to Recovery

December 10, 2009, 1:15 PMThe United States economy is struggling against “headwinds” that mean the government must retain the ability to respond to unexpected crises, even as it starts to wind down emergency programs, Treasury Secretary Timothy F. Geithner said Thursday.

American International Group, Bank of America, Chrysler, Citigroup, General Motors, TARP, Timothy F. Geithner

INVESTMENT BANKING

Bank of America Finishes TARP Repayment

December 10, 2009, 5:11 AMBank of America fully repaid the U.S. government the $45 billion in aid it took during the height of the financial crisis, the company said on Wednesday.

Bank of America

INVESTMENT BANKING

Citi Is Eager to Pay Back Bailout Aid

December 10, 2009, 2:17 AMA year after accepting two taxpayer bailouts, Citigroup is racing to raise billions of dollars in the stock market to repay the aid, a crucial step in freeing itself from Washington’s grip.

via Andrew’s Dealbook Remember Andrew Sorkin is also writing the facebook movie!

We shld start saving right about now..

Well these here are the expenses we needed done..

Jobs bill approved

The U.S. House approved a $154 billion economic-aid package and a $290 billion increase in the legal limit on government borrowing as the chamber wrapped up its legislative business for the year.

via Bloomberg

The house voted these measures in with a narrow vote and the senate is expected to oppose the jobs bill
Once the senate is done, that makes the complete $1.1 T including the defense spending below and starts the jobs giveaway..i hope recovery.gov can track this one.

Isn’t a $1.1 trillion too much?

Wow, it might add up to a little more

This $1.1 trillion bill is not using the leftover funds from TARP at all. And sorry to sound like a tired donkey on the wrong crop, but keeping stakeholders happy with extra cash is going to come back to someone discussing your Rassmussen reports.

In the Fat Cat Bankers interview,

In the interview, which was conducted last week for CBS’s “60 Minutes,” Mr. Obama was asked about Wall Street banks that had recently recovered enough to repay government loans, but once again planned to give large bonuses to employees. News of the bonuses has has only fueled continuing anger over the bank bailouts.

“They don’t get it,” Mr. Obama said. “They’re still puzzled why is it that people are mad at the banks. Well, let’s see. You guys are drawing down ten million, twenty million dollar bonuses after America went through the worst economic year that it’s gone through in decades, and you guys caused the problem.”

Lawrence H. Summers, the White House chief economic adviser, said on ABC’s “This Week” Sunday that bankers “need to recognize that they’ve got obligations to the country after all that’s been done for them, and there is a lot more they can do.”

There is a reason why this comes here. Obama meets the bankers tonight to discuss their ‘special responsibility’ that presumably ties in with his own fiscally prudent self. And he is signing of $1100 billion at the year end himself. With an extra $650 billion for

The bankers will probably tell him his funds are safe now that BofA and Citi are well on their way, In fact BofA is now out of the purview of Federal supervision, leaving only 6 like Citi and AIG in their grasp. The Financial regulatory bill has more than 12 months to go in the Senate, notwithstanding the approval by the House.

These are the pork projects for the FBI and the CIA over 3000 of them

This still leaves the $650 billion defense bill that includes action to raise the $12.1 trillion ceiling of US debt and proposals to save the job market. This includes the savings from TARP funds as of today. In the five bills included in the sign off piece, FBI gets $7.9 billion, a $680 million increase over 2009; the Veterans Health Administration budget goes from $41 billion to $45.1 billion; and the National Institutes of Health receives $31 billion, a $692 million increase.

All but three Democrats voted for the bill, while all but three Republicans opposed it. And as any other year end appropriation, this will be fodder for the GOP that indulged itself with a much bigger ticket every other year. More importantly, Obama needs to steer the debt and the fiscal deficiti back on track and make jobs from the petty cash he has left including this $1.1 T ( that’s just another trillion) all funded from Chinese purchase of treasuries. Hoo boy, bad end to the year!, but probably in the normal course of affairs. It is probably more a ‘Fat Cat Armed Forces’ vs the ‘Fat Cat Intelligence’ and others waiting for the annual dole. Economics and the Economy never sung the same notes, let alone the same song.

Actually, the bill has quite a few saving graces and is more than justfied. My fellow bloggers should be able to see the woods and the trees both without shaking up the snow flurries. Here are the details from Reuters:

Following are details on some items in the legislation:

* Includes $1.11 billion, a 14 percent boost, to allow the Securities and Exchange Commission to hire 420 workers to oversee investments and financial markets. The agency has faced questions about its effectiveness after it failed to catch a $65 billion scheme perpetrated by Bernard Madoff.
* Provides $824 million for the Small Business Administration, a 26 percent increase, to support new lending to small businesses. Further efforts to encourage small-business growth could pass Congress in the coming weeks as part of an effort to bring down U.S. unemployment, which stands at 10 percent nationally.
* Requires General Motors Co and Chrysler to submit to binding arbitration to determine whether auto dealerships they have tried to close should be reopened.
* Includes a 50 percent increase to fight fraud in entitlement programs such as Social Security and Medicare. Lawmakers say this could save $48 billion over the next 10 years.
* Provides $2.5 billion for high-speed rail intercity rail projects, on top of $8 billion signed into law earlier this year as part of the economic stimulus bill.
* Includes nearly $1.5 billion for new nonmilitary aid to Pakistan, proposed by Obama as one tool to combat extremism there.
* Has no money for an infrastructure bank requested by the Obama administration to finance large-scale transportation projects. Lawmakers said the $5 billion project was too complex to handle through a spending bill.
* Reduces economic, governance and security aid to Iraq by 30 percent; keeps levels to Pakistan and Afghanistan roughly the same.
* Prevents the government from doing business with U.S. companies that have moved headquarters overseas to reduce their tax bills.
* Prevents the Export-Import Bank from providing loans to oil companies that do business with Iran.

[Tag Onomics, 2008, 2009, Banks, Reform, Banking, Crisis, Meltdown, TARP, Healthcare, Health]

Financial regulatory reform: A new paradigm for Banking is yet far

The new reforms

OTC derivative are a $450 trillion industry and after the reforms are passed, the only knowledge public would be where one of the biggies is on at least one side of the transaction. No banker is basing his price on your swaps to what the other bank did..they are but only to probably engage you with themselves next time ( and that is not shopping for discounts as you would either)

Everyone is still paying the bankers more and then you find the price on record for only the bigger deals as the registered biggies typically will have a minimum ticket size to waste their resources on. Also, these regulations are myopic in that the dealmakers and advisors are able to buy/sell insurance against/for the deal in a matter of minutes after each such deal. None of Goldman Sachs or AIG are anyways paying for the deal. I do not want to sound negative but you must know the facts and during its passage in the Senate thru 2010 you just might.

What Hank Palson started and what Lehman’s Fuld would claim now, would come back uglier and bigger next time. When the Oversight Council points out to another Bear next time, the counterparties of that Bear will hold significant mileage as that drama unfolds. In a market there are two parties to each deal, and here there are many inter-connected deals that can solve or create the problem, to put it simply and then when an Oversight council meets a Greenberg will come up and demand his way for knowing how the Council works.

MANAGING SYSTEMIC RISK

* Establishes inter-agency Financial Services Oversight Council, with staff and funding, chaired by Treasury secretary
* Council can tighten regulatory screws on firms that are in distress or judged to pose a threat to financial stability
* Council members include Federal Reserve, Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Deposit Insurance Corp, other bank supervisors
* Firms’ debt-to-equity ratio can be capped at 15-to-1, credit exposure to unaffiliated companies limited to 25 percent of capital stock, among balance-sheet strengthening steps
* Firms can be ordered to hold contingent capital, or long-term hybrid debt convertible to equity in emergencies
* In extreme cases, firms can be ordered to restructure, restrict executive pay, sell businesses, or otherwise break up
* Treasury secretary must approve order to divest more than $10 billion in assets; president, more than $100 billion
* Risky firms must undergo annual “stress tests” and submit “living wills” on how firms could be unwound quickly
* For first time, Federal Reserve monetary policy subjected to audits by congressional watchdog

SENATE OUTLOOK: Senate bill proposes stronger inter-agency council, smaller role for Federal Reserve in managing risks

DEALING WITH TROUBLED FIRMS

* In emergencies, FDIC can back debts of solvent firms, up to $500 billion, drawing on Treasury borrowings, fees to firms
* FDIC can liquidate insolvent firms through bankruptcy or orderly receivership, like FDIC now dismantles failing banks
* Fully secured creditors in FDIC dissolutions can have up to 10 percent of their claims treated as unsecured claims
* “Systemic dissolution fund” of $200 billion helps pay for FDIC actions, drawn from fees charged to firms with more than $50 billion in assets, and Treasury borrowings
* Fees paid by banks into FDIC’s existing Deposit Insurance Fund become risk-based, cutting small banks’ fee burden
* In financial emergencies, Fed can extend loans to a wide variety of businesses up to a total of $4 trillion

SENATE OUTLOOK: Senate bill proposes paying for dissolutions of troubled firms after the fact

SUPERVISING BANKS, SECURITIZERS

* Office of Thrift Supervision abolished and its operations merged into Office of Comptroller of the Currency
* Lenders must retain 5 percent of credit risk of loans securitized for sale onto secondary debt market

SENATE OUTLOOK: Senate bill proposes more radical bank supervisor centralization, similar securitization reform

REGULATING OTC DERIVATIVES

* Over-the-counter derivatives go through clearing and exchanges or equivalent facilities where possible
* Swaps not cleared centrally must be reported to swap repository or to regulators
* “End users” of swaps, such as airlines and agribusinesses, can be exempted from central clearing
* Regulators can set position limits on swap trading and on security-based and commodity-based derivatives
* Financial firm clearinghouse stakes capped at 20 percent

SENATE OUTLOOK: Senate has competing bills, main bill has narrower end user exemptions than House

More ‘critique’

However, the basics look fine with a cap of Debt Equity of 15-1, making everyone a scheduled bank ( earlier), asking for provisions of contingent capital, and getting the Fed reserve a more focussed role rather than everything. “Stress Tests” and “Living Wills ” have already been around, the top global banks share these within the bank and whether they will ever be made public for their impact is a matter of conjecture. Especially as it might not be prudent to discuss risk policies threadbare in the public domain and as always, you would need to provide the banks to cnduct their businessuniquely per their positioning with their clients.

Solvent debt contracts can be saved by FDIC probably even today. The $500 billion tab helps them discover the FDIC address a little sooner, but unlikely it will happen the weekend they are still solvent. Doesn’t work like that when you have to eject from a jet fighter on fire, never. Some respite for secured creditors, that should have just brought down

PROTECTING INVESTORS, CURBING PAY

* SEC standards for brokers and investment advisers harmonized, mandatory investor-broker arbitration curbed
* SEC’s budget doubles, enforcement powers strengthen
* Investors get annual, nonbinding votes on executive pay, while pay plans encouraging excessive risk can be prohibited

Managing performance pay is going to be a herculean effort for the new Oversight Council, in its mandatorily advisory role, but the CFPRA from Dodd is a clear winner…Retail Banking ( Cards, Loans and Mortgages ) is something easy to tackle and where America would be watching it everyday and if that itself turns around this bill would have brought US back to the rails.

CREATING CONSUMER WATCHDOG

* Consumer Financial Protection Agency (CFPA) created to regulate mortgages, credit cards, other financial products
* Fed, other existing agencies stripped of consumer protection duties, which would go to CFPA
* Exempted from CFPA oversight are auto dealers, retailers, accountants, tax preparers, real estate agents
* States can have tougher rules than CFPA, but federal regulators can block state laws in some circumstances
* Banks with less than $10 billion in assets need not have full-scale CFPA exams, but must follow agency’s rules

The above, along with measures in the CARD bill however will face significant opposition from Moneycenter banks. The regulators will have to cap interest rates further and also tackle the Bankers’ flights of fancy with overdraft charges that have been hiked recently and interest rates on credit cards that have been hiked recently.. once the profits are in, more focussed regulatory action is plausible against the rampant malpractice

Last but not the least, getting Hedge Funds, Credit rating agencies and regulators would be even tougher now, and this start could not have gone any further at this point either. It’s anyone’s guess where that might lead us and the only way to find out would be to let them come out and show what they would be playing. the Oversight committees and other regulators will have to sit in on the verdict till 2012

REGULATING HEDGE FUNDS, CREDIT RATING AGENCIES

* Hedge funds, private equity firms, offshore funds must register with SEC, while venture capital firms and funds with less than $150 million in assets exempted

* SEC gets new oversight over credit rating agencies, which exposed to more investor lawsuits

MONITORING INSURERS

* Federal Insurance Office (FIO) set up to monitor insurance industry for first time, but not regulate it

* FIO cannot preempt state insurance laws except in limited circumstances, preserving state-level regulation

This regulation package is not going to work unless America wants it to work. And asking A service firm to not pay its employees from profits is unlikely to work after some time. But it has to be done over the next 2-3 years, this regulation itself may just be political fodder for 2010 from here. We bankers are the ones that know the products, the risk and the profits. And we are all in it together.

A special thanks to Kevin Drawbaugh and Leslie Adler for putting together the bill summary. Must have been a horrible weekend.

Banking regulation in India and China might influence global regulation more as bankers retract from multi tiered deals later on, but as of now it is the US example that is the important one for Europe and rest of the sinking world to fathom. European regulation has always been seemingly faster, higher and stronger on risk regulation but to no avail. Even the terms of the Competition commission in dealing with the monopolistic markets from new consolidation are a little touch and go and european banks in particular have more pain to follow as they stick to their ‘specially created isolated time warp’ for regulatory reporting and accounting that neither follows the US model nor shows any signs of resilience or realism.

Financial Bailout Extended Until Next October : NPR

Treasury Secretary Timothy Geithner announced Wednesday that the administration will extend the government's financial bailout program until next fall.

In a letter to House and Senate leaders, Geithner said the extension is “necessary to assist American families and stabilize financial markets.”

Money from the $700 billion taxpayer-funded bailout program has helped rescue big Wall Street firms, auto companies and others. That's angered many Americans, who feel the government hasn’t provided them with relief from high unemployment and rising home foreclosures.

Geithner said the Troubled Asset Relief Program that Congress passed in October 2008, will be extended until Oct. 3, 2010. He has the authority to extend the TARP simply by notifying lawmakers.

“The recovery of our financial system remains incomplete,” Geithner told lawmakers. “And, near-term shocks to that system could undermine the economic recovery we have seen to do.”

The Treasury secretary said new commitments bankrolled by the bailout fund will be limited to three areas next year.

One focus is stepping up efforts to curb record-high home foreclosures, a move necessary to stabilize the housing market and support a lasting economic recovery.

Another will be providing capital to small banks, which play a crucial role in providing credit to small businesses – normally a leading engine of job creation. But small banks have been weighed down by problem commercial real estate loans, which has made them reluctant to lend and hurt the ability of small businesses to expand and hire.

In a third area, Geithner said the government may boost its commitment to a program aimed at sparking lending to consumers and small businesses. Run by Treasury and the Federal Reserve, the Term Asset-Backed Securities Loan Facility, or TALF, started in March.

Geithner said he didn’t expect any new commitments to the TALF would result in additional costs to taxpayers.

via Financial Bailout Extended Until Next October : NPR.

zyakaira notes: Unfortunately with the press taking different sides, the timeline of the crisis and the stimulus  and even things such as the healthcare bill are very difficult to make out  sometimes. Such crisp notices keep america alive and NPR should get kudos, visitors and continuous financing for the enabling work they do in processing insight and accuracy too. i have also recently become a fan of ‘Wait, Wait .. don’t tell me’ which takes up matters after my own heart for the American people and in a fun way too in front of live audience. Radio is and must go on.

America liked Clunkers’ speed,

Caulkers are Green?

If you hated Obama administrations climate Change plan, America’s denizens could soon put you in a minority. Because Obama has found a way to spend the extra cash he saved from TARP ( see O’nomics:wow-it-might-add-up-advantage-zyaada/)  I have been unable to catch this anywhere else except our Time Warner scoop-a-thon CNN Money yet, but it is a valid program after the unprecedented success of Cash for Clunkers that kept erstwhile and current homeowners busy in August, September and October

President Obama proposed a new program Tuesday that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy.

The administration didn’t provide immediate details, but said it would work with Congress on crafting legislation. Steve Nadel, director at the American Council for an Energy-Efficient Economy, who’s helping write the bill, said a homeowner could receive up to $12,000 in rebates.

The proposal is part of the President’s larger spending plan, which also includes money for small businesses, renewable energy manufacturing, and infrastructure.

We know energy efficiency “creates jobs, saves money for families, and reduces the pollution that threatens our environment,” Obama said. “With additional resources, in areas like advanced manufacturing of wind turbines and solar panels, for instance, we can help turn good ideas into good private-sector jobs.”

The program contains two parts: money for homeowners for efficiency projects, and money for companies in the renewable energy and efficiency space.

The plan will likely create a new program where private contractors conduct home energy audits, buy the necessary gear and install it, according to a staffer on the Senate Energy Committee and Nadel at the American Council for an Energy-Efficient Economy.

Big-ticket items like air conditioners, heating systems, washing machines, refrigerators, windows and insulation would likely be covered, Nadel said.

Consumers might be eligible for a 50% rebate on both the price of the equipment and the installation, up to $12,000, said Nadel. So far, there is no income restriction on who is eligible. That would mean a household could spend as much as $24,000 on upgrades and get half back.

via Cash for Caulkers could mean $12K per home – Dec. 8, 2009.

Things are looking up too! Bernanke is. | O’nomics

Watch our related post on how we have the snowmobile working to clear the c’congested’ road out to work..(TARP)

Well, all we needed to get on the road was pleasant musical carols singing we have cut down the debt..people almost rose to the occassion, refusing to pull out credit cards, but consumer credit overall is up with spending on cars and other personal loans..mortgages haven’t really taken off yet only the superbargain homes being bought up at less than $100k from foreclosures..Out here in the emerging markets, you can’t get easy credit for more than one home per family too and that might still be something to do for Bernanke ( if he makes it!)

October consumer credit outstanding fell at a 1.69 percent annual rate to $2.48 trillion. September’s figures were revised to show a $8.77 billion drop, previously reported as a $14.8 billion fall.

Analysts polled by Reuters had forecast consumer credit dropping by $9.5 billion in October. Consumer credit has now declined for nine straight months.

Confronted with the worst labor market in 26 years, consumers have been reluctant to spend, raising doubts that the fragile economic recovery might falter once the stimulus from government spending runs out.

“Households are still in the process of deleveraging. They are increasing spending, but its coming out of the savings they have accumulated during the recession,” said Bernard Baumohl, chief global economist at The Economic Outlook Group in Princeton, New Jersey.

“They are not acquiring new debt. We need to have consumers ramp up their spending if this economy is to continue to grow through 2010.”

Nonrevolving credit, which includes closed-end loans for big-ticket items such as cars, boats, college education and holidays, rose $3.44 billion, or at a 2.59 percent annual rate, to $1.59 trillion.

via U.S. consumer credit decline slows in Oct | Reuters.