Saturday, June 20, 2009

Obama "ready to fight" for new financial agency

Obama ready to fight for new financial agency
By Doug Palmer
WASHINGTON (Reuters) - President Barack Obama said on Saturday he is "ready to fight" for a tough new agency to protect consumers from risky loans and other financial products and lashed out at groups that might stand in the way.
"These interests argue against reform even as millions of people are facing the consequences of this crisis in their own lives," Obama said in a weekly radio address.
"These interests defend business-as-usual even though we know that it was business-as-usual that allowed this crisis to take place."
Obama said opponents were already "mobilizing" against his proposal earlier this week to create a new Consumer Financial Protection Agency as part of the most sweeping set of financial regulatory reforms since the 1930s.
The new agency, which Congress would have to approve, would have the power to write rules and design or ban financial products. It could also examine firms and impose fines and other penalties on almost any institution that offers products such as home loans or credit cards.
Critics argue that the new agency would stifle financial product innovation, boost the cost of regulatory compliance and cause prices for consumers to rise.
"It's going to create exactly the type of duplication, second-guessing and layering that we feared," David Hirschman, president of the U.S. Chamber of Commerce's Center for Capital Markets, said earlier this week.
Obama said the proposed agency was badly needed to help consumers make sense of complex financial instruments and to keep loan companies honest.
"Today, folks signing up for a mortgage, student loan, or credit card face a bewildering array of incomprehensible options. Companies compete not by offering better products, but more complicated ones -- with more fine print and hidden terms," Obama said.
"The American people sent me to Washington to stand up for their interests. And while I'm not spoiling for a fight, I'm ready for one."
Senior lawmakers have said they expect to pass financial reform regulation by the end of the year.
Treasury Secretary Timothy Geithner, at a Senate hearing on Thursday, faced the most opposition to Obama's proposal to give the Federal Reserve new powers to police broad risks in the economy.
Some lawmakers believe the central bank failed to halt practices that led to the global financial crisis.
Giving the Federal Reserve more authority "is like a parent giving his son a bigger, faster car right after he crashed the family station wagon," said Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat.
(Reporting by Doug Palmer; editing by Chris Wilson)

Source: Reuters

Sharpening tone, White House condemns Iran violence

Sharpening tone, White House condemns Iran violence
By Jeff Mason and Steve Holland
WASHINGTON (Reuters) - President Barack Obama toughened his rhetoric on Friday in support of Iranian demonstrators protesting a disputed presidential election and criticized the Tehran government for its violent response.
Obama's comments came after a strong warning to protest leaders by Iran's supreme leader and criticism by Republican lawmakers, led by Senator John McCain, of a tepid White House response to the protests and to charges the vote was rigged.
"I'm very concerned based on some of the tenor -- and tone of the statements that have been made -- that the government of Iran recognize that the world is watching," Obama told CBS News.
"And how they approach and deal with people who are, through peaceful means, trying to be heard will, I think, send a pretty clear signal to the international community about what Iran is and -- and is not."
Obama also said Washington must be careful not to become "a foil for those forces inside Iran who would love nothing better than to make this an argument about the United States. That's what they do. That's what we're already seeing. We shouldn't be playing into that."
Tehran, with which Washington severed ties shortly after Iran's 1979 Islamic revolution, has already accused the United States of "interventionist" U.S. statements on the election.
Iranian Supreme Leader Ayatollah Ali Khamenei said on Friday that last week's election was won fairly by President Mahmoud Ahmadinejad and not rigged, as defeated candidate Mirhossein Mousavi alleges. Khamenei warned protest leaders they would be responsible for any bloodshed.
Iranian state media have reported seven or eight people killed in unrest since the election outcome was published last Saturday and prompted opposition supporters to hold mass protests in Tehran.
On Friday, McCain told Reuters the Iranian election was "corrupt" and urged Obama to speak out more forcefully on behalf of the demonstrators.
"I'm not saying send arms to them, I'm not saying they should foment revolution, I'm not saying they should do anything but hear that the United States of America supports their assertion of their basic human rights," said McCain, who lost to Obama in last year's U.S. presidential election.
Obama has been less critical of the election than many European leaders to avoid being accused of meddling in the election and potentially triggering a backlash against the demonstrators just as his administration seeks to engage Tehran over its nuclear program.
'SOMETHING EXTRAORDINARY'
Obama's spokesman on Friday sharpened the tone.
"The violence is being conducted by the government, right?" Robert Gibbs told reporters. "The Revolutionary Guard: the pictures that we saw on Monday that the president reacted to, that was them."
"I think you're definitely witnessing something extraordinary," he said of the demonstrations. "I'm not sure that anybody even a week ago or so would have expected to see the courageous images that we're seeing now." Continued...
Source: Reuters

Democrats push for new government health plan

By Donna Smith
WASHINGTON (Reuters) - Democrat lawmakers on Friday proposed guaranteeing health coverage for nearly every American, despite mounting concerns the cost of doing so could torpedo the Obama administration's healthcare reform effort.
In the latest draft of the healthcare bill, Democrats in the U.S. House of Representatives suggested all citizens should be able to get insurance regardless of medical history and that coverage should be mandatory for individuals and businesses.
The proposal would create a new government plan to help cover the uninsured -- a move backed by President Barack Obama but resisted by Republicans and some centrist Democrats who fear it will overwhelm private insurers and require vast amounts of public funding.
Republicans, the minority party in Congress, have set out their own more modest healthcare changes, but they lack the votes in either the House or the Senate to push them through or derail the Democrats' health reform drive.
They are seeking instead to moderate coming reforms and are focusing on the cost of restructuring the healthcare system, which is projected at more than $1.5 trillion -- a huge expense for a nation carrying record budget deficits.
The Democrats' bill would create new health insurance exchanges where people shop around for coverage. But whether or not a government-run plan has a role in these exchanges remains the subject of serious political debate.
Energy and Commerce Committee Chairman Henry Waxman, a Democrat, said the public plan, if self-sufficient and sustained through premiums rather than government handouts, would improve competition in the healthcare insurance market.
"We want to keep everyone honest, and competition is the best way to do it," Waxman said.
Waxman's panel is one of three House committees writing the legislation. They plan hearings next week on the draft proposal and hope to get a final bill to the House for consideration by the end of July.
OPEN TO CHANGES
House Education and Labor Committee Chairman George Miller said he and his fellow Democrats were open to changes and would consider just about any proposals made by Republicans or wavering Democrats.
"If there is one thing off the table, it is saying 'no' to healthcare reform," Miller told reporters.
Republicans pointed out that the latest draft proposal failed to address two major issues -- the cost of the plan and how to pay for it.
"The majority has an obligation to come forward with how they are going to pay for this," Representative Dave Camp, the top Republican on the taxwriting House Ways and Means Committee, said in a telephone interview.
Democrats say proposed cost savings in existing government health programs will help cover costs. But they also are considering tax increases to ensure the new program does not add to budget deficits that may reach $1.8 trillion this year. Continued...
Source: Reuters

Rep. Frank talks tough on U.S. bank capital rules: PBS

Rep. Frank talks tough on U.S. bank capital rules: PBS
WASHINGTON (Reuters) - A top U.S. lawmaker said on Friday he was considering proposing new capital rules for big banks that would get tougher as their assets increased.
Barney Frank, the Democrat who chairs the House of Representatives Financial Services Committee, said he spoke with Treasury Secretary Timothy Geithner about ways to make it "very tough" for banks to become too big to fail, according to an interview on PBS television's Nightly Business Report.
One idea under consideration was to set capital rules for large banks with requirements that may "go up more than proportionally" as banks increased their assets, the television program quoted Frank as saying, although it said some of his comments were made off-camera.
The regulatory overhaul plan that President Barack Obama laid out this week called for tighter regulations on the largest financial firms, and would give the Federal Reserve responsibility for monitoring risk.
But critics argued that drawing up a list of large firms that would get closer scrutiny sent a dangerous signal that these companies were too big to fail and would get government bailouts if they ran into trouble. The concern was that this would encourage them to take excessive risks.
Frank said the answer to that problem was ensuring that there were "disincentives" to firms getting too big. He said large firms would have to hold bigger capital cushions and be "more tightly restrained."
If they failed there would be severe penalties, including wiping out shareholders' equity investments and firing the chief executive, he said.
"There have to be disincentives," he said. "Because some people will say, 'Well, there will be an advantage. We'll be seen as 'too big to fail.'' And then other people will think, 'Well, I'll put my money in there, because it will always be safe.' We have to counter that. We have to put a lot of disincentives into size."
(Reporting by Emily Kaiser; Editing by Tim Dobbyn)

Source: Reuters

House panel subpoenas Fed over BofA/Merrill merger

House panel subpoenas Fed over BofA/Merrill merger
NEW YORK (Reuters) - A congressional committee said on Friday it has served the Federal Reserve with a second subpoena for documents related to Bank of America Corp's purchase of Merrill Lynch & Co.
The demand from the U.S. House Oversight and Government Reform Committee was announced six days before Fed Chairman Ben Bernanke is scheduled to testify about the central's bank's role in the weeks surrounding the January 1 purchase.
Edolphus Towns, the New York Democrat who chairs the panel, is seeking documents that discuss "closed-door discussions" that took place between September and January among the Fed, the Treasury Department and Bank of America.
Federal Reserve spokeswoman Michelle Smith said the Fed had received the subpoena and would respond.
Lawmakers have accused Bernanke and former U.S. Treasury Secretary Henry Paulson of pressuring Charlotte, North Carolina-based Bank of America to complete the merger and not reveal Merrill's financial problems, so as to not destabilize the world's markets.
Kenneth Lewis, Bank of America's chief executive, told the committee at a June 11 hearing that the bank had in December considered backing out of the merger when it learned that Merrill's losses were much larger than it expected.
Merrill would lose $15.84 billion in the fourth quarter. Two weeks after the merger closed, Bank of America accepted $20 billion of federal bailout money, and has now taken $45 billion from the government's Troubled Asset Relief Program.
It was not among the 10 large U.S. banks that the government this week allowed to repay their taxpayer-funded infusions. Bank of America has said it hopes to begin repaying TARP this year. The bank is the nation's largest by assets.
Bank of America shares were up 33 cents at $13.23 in late afternoon trading on the New York Stock Exchange. They traded at $33.74 before the Merrill purchase was announced September 15.
(Reporting by Jonathan Stempel; Editing by Tim Dobbyn)

Source: Reuters
 

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