Posts Tagged ‘Community

12
Aug
10

Fed Effort to Aid Recovery Fails to Calm Investors

NEWS
Fed Effort to Aid Recovery Fails to Calm Investors

Thursday, August 12, 2010

More worried about the recovery, the U.S. Federal Reserve has taken a small step to bolster the U.S. economy.

Wrapping up a one-day meeting, the Fed said it will use money from its investments in mortgage securities to buy government debt on a small scale. That could help nudge down long-term rates on mortgages and corporate debt, but wouldn’t have a dramatic impact on stimulating economic growth, economists say.

Perhaps more importantly, the largely symbolic action sends a signal that the Fed sees the recovery weakening and that it stands ready to take more aggressive action, if needed, to keep it on track.

Delivering a more downbeat assessment, the Fed now believes economic growth will be ‘more modest’ than it had anticipated at its late June meeting.

The Fed, citing ‘subdued’ inflation, said it would keep its target for a key interest rate at zero to 0.25 percent for an ‘extended period’.
Investors reacted positively to the statement. Stocks that were down sharply before the announcement made up some lost ground. The Dow Jones industrial average, down about 100 points just before the Fed decision, was down about 40 a short time later. However, the market was likely to fluctuate, as it usually does while investors pore over the Fed’s statement.

Treasury prices rose slightly as investors were pleased by the Fed’s plan to buy government debt, which would reduce the amount of Treasury securities in the market. The yield on the Treasury’s 10-year note, which moves in the opposite direction from its price, fell to 2.77 percent from 2.82 percent just before the announcement.

Economists doubt the Fed can turn around the economy on its own. Some believe additional help from Congress is needed. Others are sceptical that easier credit or even more government aid will persuade Americans to shop more and hire more. Yet others think some jobs – like in construction – will never return to pre-recession levels, as the economy makes a structural shift.
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21
Jul
10

Obama signs historic finance reform bill

NEWS
Obama signs historic finance reform bill
Historic financial overhaul signed to law by Obama

Wednesday, July 21, 2010

President Barack Obama on Wednesday signed into law the most sweeping reform of the U.S. finance industry since the 1930s, promising U.S. taxpayers would no longer get the bill for Wall Street excess.

The legislation, which some Republicans have pledged to repeal, introduces new consumer protections, checks the power of big banks and cracks down on deceptive practices by credit card firms.

“Because of this law, the American people will never again be asked to foot the bill for Wall Street’s mistakes. There will be no more tax-funded bailouts,” Obama promised.

Seeking to restore public confidence in his economic leadership as unemployment flirts with double digits, Obama said the bill would repair the fractures and abuses of which the financial meltdown was born.

“It was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington,” said Obama, before adding the legacy-boosting law to his huge health care reform passed earlier this year.

“These reforms represent the strongest consumer financial protections in history,” Obama said, before signing the new law, passed by Congress last week.

“These protections will be enforced by a new consumer watchdog with just one job: looking out for people – not big banks, not lenders, not investment houses.”

The financial reform bill finally squeezed through Congress with just a handful of Republican votes, as the opposition party continued with its policy of trying to block Obama’s ambitious reform program at all costs.

Republican leaders on Wednesday condemned the new law, saying it would crimp growth, and handcuff the might of America’s financial titans.

Republican National Committee chairman Michael Steele accused Obama of trying to convince “sceptical Americans that he is doing everything he can to lower unemployment.”

“President Obama has signed into law a 2300 page behemoth that will saddle the business community with innumerable unintended consequences, tighter credit, and countless job-killing regulations,” Steele said.

Obama, facing record low approval ratings in some polls, hopes the financial reforms will eventually become popular, but much of the bill, like the health care bill, is so complicated that it will not come into force for months.

For instance, it will be up to a year before a new Consumer Financial Protection Bureau is set up to protect American consumers from hidden fees and deceptive lending practices when they get a new mortgage or credit card.

It could be 18 months before new regulations emerge to stop banks from engaging in impermissible proprietary trading and investment in hedge funds – under the Volcker rule, named after former Federal Reserve chief Paul Volcker.

In a bid to highlight the help the bill will grant to the middle classes, Obama was joined at the signing ceremony by several Americans who suffered unfair treatment at the hands of credit card firms and banks.

The legislation closes loopholes in regulations and requires greater transparency and accountability for hedge funds, mortgage brokers and payday lenders, as well as arcane financial instruments called derivatives.

The measure has drawn praise but also skepticism from economists and analysts.

The bill “addresses a number of key weaknesses in the U.S. financial regulatory structure that led to the financial meltdown in 2008 and early 2009,” said Brian Bethune at IHS Global Insight.

But Diane Swonk at Mesirow Financial warned that much of the impact is not known.

“We will have more regulators overseeing – but not necessarily averting – risk, and with a bill so large and undefined, we are likely to get more, in terms of unintended than intended consequences, going forward,” she said.

The law is likely to generate heated debate ahead of congressional elections in November as Republicans call for its reversal.

House Republican leader John Boehner said recently the law “ought to be repealed” and replaced with “common-sense things that we should do to plug the holes in the regulatory system.”
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• Source(s): The White House
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15
May
10

Weekly Address: Wall Street Reform & Main Street

NEWS
Weekly Address: Wall Street Reform & Main Street

President Obama “Wall Street Reform Will Bring Greater Security to Folks on Main Street”

Saturday, May 15, 2010

In his weekly address, President Barack Obama discussed how reforming Wall Street will strengthen Main Street. The reform bill moving through Congress will empower and protect American families with the strongest consumer financial protections in history, level the playing field for community banks by making sure all lenders are subject to tough oversight, and strengthen small businesses by curbing excessive risk taking on Wall Street, which will help protect credit for our small businesses. As the economy recovers in the short term, we need to build a new foundation for growth and prosperity for the long term. This bill helps to do just that.

On Thursday, I paid a visit to a small business in Buffalo, New York, a town that’s been hard hit in recent decades. I heard from folks about the struggles they’ve been facing for longer than they care to remember. And I talked with them about what my administration is doing to help our families, our small businesses, and our economy rebound from this recession.

Jumpstarting job creation in the private sector and fostering a climate that encourages businesses to hire again is vitally important – and I’ll continue working hard to make sure that happens. But my responsibility as President isn’t just to help our economy rebound from this recession – it’s to make sure an economic crisis like the one that helped trigger this recession never happens again.

That’s what Wall Street reform will help us do. In recent weeks, there’s been a lot of back and forth about the reform bill currently making its way through Congress. There’s been a lot of discussion about technical aspects of the bill, and a lot of heated – and frankly, sometimes misleading – rhetoric coming from opponents of reform.

All of this has helped obscure what reform would actually mean for you, the American people. So, I just wanted to take a few minutes to talk about why every American has a stake in Wall Street reform.

First and foremost, you have a stake in it if you’ve ever been treated unfairly by a credit card company, misled by pages and pages of fine print, or ended up paying fees and penalties you’d never heard of before. And you have a stake in it if you’ve ever tried to take out a home loan, a car loan, or a student loan, and been targeted by the predatory practices of unscrupulous lenders.

The Wall Street reform bill in Congress represents the strongest consumer financial protections in history. You’ll be empowered with the clear and concise information you need to make the choices that are best for you. We’ll help stop predatory practices, and curb unscrupulous lenders, helping secure your family’s financial future.

That’s why families have a stake in it. And our community banks also have a stake in reform. These are banks we count on to provide the capital that lets our small businesses hire and grow.

The way the system is currently set up, these banks are at a disadvantage because while they are often playing by the rules, many of their less scrupulous competitors are not. So, what reform will do is help level the playing field by making sure all our lenders – not just community banks – are subject to tough oversight. That’s good news for our community banks, which is why we’ve received letters from some of these banks in support of reform.

What’s true for our community banks is also true for small businessmen and women like the ones I met in Buffalo. These small businesses were some of the worst victims of the excessive risk-taking on Wall Street that led to this crisis. Their credit dried up. They had to let people go. Some even shut their doors altogether. And unless we put in place real safeguards, we could see it happen all over again.

That’s why Wall Street reform is so important. With reform, we’ll make our financial system more transparent by bringing the kinds of complex, backroom deals that helped trigger this crisis into the light of day. We’ll prevent banks from taking on so much risk that they could collapse and threaten our whole economy. And we’ll give shareholders more of a say on pay to help change the perverse incentives that encouraged reckless risk-taking in the first place. Put simply, Wall Street reform will bring greater security to folks on Main Street.

The stories I heard in Buffalo this week were a reminder that, despite the progress we’ve made, we need to keep working hard, so we can build on that progress and rebound from this recession in the short-term. But even as we do, we also need to lay a new foundation for growth and shared prosperity over the long-term.

Next week, we have a chance to help lay a cornerstone in that foundation. The reform bill being debated in the Senate will not solve every problem in our financial system – no bill could. But what this strong bill will do is important, and I urge the Senate to pass it as soon as possible, so we can secure America’s economic future in the 21st century.

• Source(s): The White House
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