Friday, September 25, 2009
ECONOMYTreasury: Recovery Is Just Starting
The Obama administration on Thursday sent its clearest signal yet that it is prepared to extend its $700 billion bailout for Wall Street for another year, even as lawmakers said they were frustrated that not enough was being done to help the average American.
"We still have work to do," said Herbert Allison Jr., the senior Treasury official in charge of the bailout fund. In his testimony, Allison repeatedly deferred to Treasury Secretary Timothy F. Geithner on whether the administration would authorize an extension of the bailout program through next year as the law allows.
At the same time, Allison said further government intervention in the market may be necessary because of the decline in commercial real estate.
"In this context, it is prudent to maintain capacity to address new developments," Allison told the Senate banking committee. "By bolstering confidence, having such capacity may actually reduce the need to use it." Congress approved the rescue plan, known as the Troubled Assets Relief Program, with bipartisan support in October at the request of then-President George W. Bush during the height of the financial crisis.
-- Associated Press
Volcker Says Proposals May Not Stem Bailouts
Former Federal Reserve chairman Paul Volcker, a top White House economic adviser, said the Obama administration's proposed overhaul of financial rules preserves the policy of "too big to fail," and could lead to future bailouts.
Volcker, speaking to the House Financial Services Committee, said he does not differ with the administration on most of its proposals, and takes "as a given" that banks will be bailed out in times of crisis. But he opposes bailouts of insurance firms like American International Group, automakers' finance arms and others. "The safety net has been extended outside the banking system," Volcker said. "That's what I want to change."
-- Associated PressDEFENSE
Pentagon Releases Rules on Tanker Bids
The Pentagon has unveiled what it calls "crystal clear" rules in a $35-billion contest to build new refueling aircraft after two botched attempts, although some lawmakers said a trans-Atlantic trade dispute should have been accounted for.
Boeing, the second largest U.S. defense contractor, is vying for the contract against a team made up of Northrop Grumman and Europe's EADS, parent of Airbus. The contract would be for an initial 179 tanker aircraft, the first of three acquisition stages valued at $100 billion.
The Pentagon said it would release the new rules to companies on Friday and give them 60 days to comment. It hopes to award a contract for the new planes in the middle of next year, with the first planes to be delivered in 2015.
OCC Chief Defends Federal Preemption
A top federal regulator denounced as a "radical change" an element of the Obama administration's plan to overhaul financial rules that would allow states to apply stricter consumer protection laws to banks than the national standard. The remarks by Comptroller of the Currency John Dugan marked the latest debate over the massive plan to restructure the nation's financial rules. They also reopened the issue of federal preemption of state laws governing consumer protection -- something Dugan's agency has long battled over with the states.
"This radical change is fundamentally at odds with the concept of efficient national standards for national products and services offered across state lines in national markets," Dugan said in an address to Women in Housing and Finance, a Washington group. Dugan, a Republican appointed by President George W. Bush in 2005, is one of the five directors of the FDIC.
-- Associated PressTRADE
A New Complaint Over Chinese Paper
A U.S. labor union and three paper companies have filed a new trade complaint over imports of Chinese paper, possibly fueling tensions between Washington and Beijing amid disputes over tires and other goods. The complaint was announced as President Obama and his Chinese counterpart, Hu Jintao, were attending a summit of leaders of the Group of 20 major economies in Pittsburgh.
The case accuses China, along with Indonesia, of improperly subsidizing exports of some types of coated paper that it says have flooded the U.S. market, wiping out thousands of American jobs.
-- Associated Press