Monday, June 15, 2009

U.S. financial reforms outlined

U.S. financial reforms outlined
WASHINGTON (Reuters) - Senior Obama administration officials on Monday said in a newspaper op-ed piece that a landmark financial regulation reform plan to be released this week will target capital requirements, securitization and other problem areas blamed for the global financial crisis.
In the most complete summary of the plan seen in some time, U.S. Treasury Secretary Timothy Geithner and National Economic Council Chairman Lawrence Summers said the plan would offer "a stronger framework for consumer and investor protection."
The piece was published in The Washington Post days ahead of the expected release on Wednesday of a package of administration proposals under discussion for six months now.
One proposal, said Geithner and Summers, will be "raising capital and liquidity requirements for all institutions, with more stringent requirements for the largest and most interconnected firms."
In addition, large and interconnected firms whose failure could threaten the stability of the system "will be subject to consolidated supervision by the Federal Reserve, and we will establish a council of regulators with broader coordinating responsibility across the financial system."
New reporting requirements will be urged for issuers of asset-backed securities, as well as a rule saying securitizers must "retain a financial interest" in the performance of the asset-backed securities they issue, they said.
Reduced reliance on credit-rating agencies will also be proposed, said the piece.
Addressing another market implicated in the crisis, the plan will urge "oversight of 'over the counter' derivatives," an unspecified "harmonizing" of futures and securities regulation, and stronger payment and settlement systems.
"All derivative contracts will be subject to regulation, all derivatives dealers subject to supervision, and regulators will be empowered to enforce rules against manipulation and abuse," according to the op-ed piece.
It said the proposals will call for "a resolution mechanism that allows for the orderly resolution of any financial holding company whose failure might threaten the stability of the financial system."
It also said the United States "will lead the effort to improve regulation and supervision around the world."

Source: Reuters

Obama officials outline financial reforms

Obama officials outline financial reforms
WASHINGTON (Reuters) - Senior Obama administration officials on Monday said in a newspaper op-ed piece that a landmark financial regulation reform plan to be released this week will target capital requirements, securitization and other problem areas blamed for the global financial crisis.
In the most complete summary of the plan seen in some time, U.S. Treasury Secretary Timothy Geithner and National Economic Council Chairman Lawrence Summers said the plan would offer "a stronger framework for consumer and investor protection."
The piece was published in The Washington Post days ahead of the expected release on Wednesday of a package of administration proposals under discussion for six months now.
One proposal, said Geithner and Summers, will be "raising capital and liquidity requirements for all institutions, with more stringent requirements for the largest and most interconnected firms."
In addition, large and interconnected firms whose failure could threaten the stability of the system "will be subject to consolidated supervision by the Federal Reserve, and we will establish a council of regulators with broader coordinating responsibility across the financial system."
New reporting requirements will be urged for issuers of asset-backed securities, as well as a rule saying securitizers must "retain a financial interest" in the performance of the asset-backed securities they issue, they said.
Reduced reliance on credit-rating agencies will also be proposed, said the piece.
Addressing another market implicated in the crisis, the plan will urge "oversight of 'over the counter' derivatives," an unspecified "harmonizing" of futures and securities regulation, and stronger payment and settlement systems.
"All derivative contracts will be subject to regulation, all derivatives dealers subject to supervision, and regulators will be empowered to enforce rules against manipulation and abuse," according to the op-ed piece.
It said the proposals will call for "a resolution mechanism that allows for the orderly resolution of any financial holding company whose failure might threaten the stability of the financial system."
It also said the United States "will lead the effort to improve regulation and supervision around the world."

Source: Reuters

Obama to lobby doctors on healthcare reforms

Obama to lobby doctors on healthcare reforms
By David Alexander
WASHINGTON (Reuters) - With Congress working to flesh out controversial elements of his healthcare reform plan, President Barack Obama will make his case for a public insurance program to the nation's doctors on Monday, seeking to overcome their resistance.
Obama, in a speech to the American Medical Association, will "lay out his vision for a system that replicates best practices, incentivizes excellence and closes cost disparities -- and he'll ask for our medical professionals' help in getting the job done," an administration official said.
Speaking to the doctors' annual meeting in Chicago, Obama will make his case for "a health insurance exchange where private plans compete with a public option that drives down costs and expands choice," the official said.
The president's speech to the AMA comes as debate sharpens over elements of the sweeping healthcare overhaul being drafted by Congress, including how to pay for the plan and whether it should include a public insurance program to compete with private insurers.
The U.S. healthcare industry costs about $2.5 trillion annually but leaves 46 million Americans uninsured and with little access to medical care. Despite the cost, the U.S. system consistently ranks worse than other developed countries on many key measures.
The president argues that a public insurance plan is needed to compete with private insurers to drive down costs, but some Republicans say a public plan would have competitive advantages that would ultimately drive private insurers out of the market.
The AMA has expressed skepticism about any public insurance plan that would be similar to the Medicare program for the elderly. But the group said last week it was willing to consider other public options being considered by Congress, including member-owned cooperatives.
"Health reform that covers the uninsured is AMA's top priority this year," AMA President Nancy Nielsen said in a statement. "Every American deserves affordable, high-quality healthcare coverage."
Health Secretary Kathleen Sebelius, in a round of television news show appearances on Sunday, defended the president's push for a public insurance option.
"The president feels that having a 'public option' side by side -- same playing field, same rules -- will give Americans choice and will help lower costs for everybody. And that's a good thing," Sebelius told CNN.
"The president does not want to dismantle privately owned plans," she added. "He doesn't want the 180 million people who have employer coverage to lose that coverage. He wants to strengthen the marketplace."
But many Republicans oppose a public plan and say there is not enough support in Congress to approve. The idea of a system of federally chartered insurance cooperatives has emerged as an alternative to a public plan.
(Editing by Philip Barbara)

Source: Reuters

Mayors say cities need direct economic help

Mayors say cities need direct economic help
By Camille Drummond
NEW YORK (Reuters) - Without more direct aid to U.S. local governments, Washington may make matters worse for cities facing falling tax revenues and increased spending needs, the nation's mayors said at their annual meeting this weekend.
Mayors said they bear the tough task of cutting services and jobs vital to U.S. cities, even with help from the $787 billion in stimulus funds Congress passed in February.
"We make these decisions because we don't have a choice," said Miami Mayor Manuel Diaz, current president of the U.S. Conference of Mayors, referring to layoffs and cost cuts in education and urban development. "We have to balance our budgets, and we cannot print money every week."
Philadelphia Mayor Michael Nutter said the "toughest part is cutting back on programs and services that people really want in their communities, and having to explain to them why we can't do certain things anymore because we just don't have the money."
Local governments, struggling to issue debt in a largely stalled municipal bond market, expressed worries that current federal stimulus initiatives -- including development grants, infrastructure funding, and the subsidized Recovery Zone and Build America Bonds -- while helpful, may not be enough in the financial crisis.
"And it's important that metropolitan areas get money directly for recovery, and not through the states," said Los Angeles Mayor Antonio Villaraigosa, who has voiced concerns that states may use stimulus funds to close their own budget deficits, especially in California with its massive $24.3 billion gap.
Organizers of the mayor's annual conference had counted on President Barack Obama and others from his administration to attend, but a labor dispute between host Mayor David Cicilline of Providence, Rhode Island, and the area's firefighters union led to the unprecedented federal absence from the meeting.
(Reporting by Camille Drummond; Editing by Vicki Allen)

Source: Reuters

Test awaits Obama this week on financial reforms

Test awaits Obama this week on financial reforms
By Kevin Drawbaugh
WASHINGTON (Reuters) - The Obama administration on Wednesday will unveil its long-awaited plan to tighten U.S. financial regulation, marking a test of its resolve to seize political opportunity and face down powerful interests.
Banks and financial firms are pushing hard in Washington to soften the plan, which has been under debate for six months in response to a severe credit crisis and a deep recession that is already going a long way toward reshaping capital markets.
Political realities on Capitol Hill, where the industry is deeply entrenched and lawmakers protect their turf, have already tempered some approaches for bringing the antiquated U.S. regulatory system into the 21st century.
Treasury Secretary Timothy Geithner is scheduled to testify in congressional hearings about the plan on Thursday.
In the short-run, the plan's substance will be less important than the appearance it creates, analysts said.
"In this environment ... regulation is not an industry issue. It's a political issue. The government needs to be seen as responsive and doing something," said Dushyant Shahrawat, senior research director at research firm TowerGroup.
Months of debate on the details lie ahead, with time on the side of the status quo, especially if the economy continues to improve and public outrage begins to fade. Republicans last week proposed more modest reform proposals.
In the long run, whatever changes get made, investors shouldn't expect the bulls and bears of the market to be tamed, although the financial system will likely be warier of risk, more transparent and more stable for a time, analysts said.
Financial leverage is already down sharply, while a massive dose of skepticism about asset values has been injected into banking, and financial executives are likely keen, for now, to avoid more embarrassing testimony before Congress.
"I'm not willing to say that that will continue on endlessly," Shahrawat said. "Firms have a bad habit of going back to old habits. But at least for the next three to five years, I don't think" risk will be as big an issue.
SEC, CFTC SURVIVE
One example of the administration's partial retreat from earlier reform intentions has to do with existing regulatory agencies -- such as the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Reorganizing these bureaucracies was once seen as vital to closing gaps in oversight and blocking financial firms from shopping around for the least strict regulator. For instance, American International Group was under the jurisdiction of the Office of Thrift Supervision, a savings-and-loans overseer, when the giant insurer was bailed out by taxpayers.
But no top-to-bottom agency overhaul will be proposed, said sources familiar with administration discussions.
The White House and congressional leaders have decided that such a move is not politically feasible, given opposition in the industry and division among committees of Congress that don't want to lose their oversight of the SEC and CFTC. Continued...
Source: Reuters
 

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