Economic Agenda: March 17, 2010

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Key Events

8:30 a.m.: The Labor Department releases data on prices at the wholesale level for February. Economists surveyed by Bloomberg expect the producer price index to fall 0.2 percent on a monthly basis; after excluding volatile prices for food and energy, the index is expected to rise 0.1 percent.

2 p.m.: Federal Reserve Chairman Ben S. Bernanke testifies before the House Financial Services Committee on how bank supervision informs monetary policy.

Talk about perfect timing: The American Bankers Association holds the second day of its annual government relations summit, just after the introduction of Senate legislation that would drastically reshape how that industry is regulated.

In Wednesday's Washington Post

The U.S. Chamber of Commerce hopes to tip the scales in this fall's elections with a broad-based lobbying operation that rivals grass-roots efforts of the nation's two main political parties, and the group plans to spend at least $50 million in targeting vulnerable Democrats in battleground states.

The balance of power at the Federal Reserve would be fundamentally altered under financial reform legislation unveiled this week by Sen. Christopher J. Dodd (D-Conn.), with most of the nation's 12 regional Fed banks ceding a significant amount of authority to Washington and New York.

After wading through Dodd 2.0, columnist Steven Pearlstein concludes that the revised Senate financial reform bill contains so many political accommodations that Wall Street will eventually find a way around its signature safeguards. His recommendation? Start rewriting.

Speaking of regulatory reform, Ezra Klein finds that while the Dodd bill would greatly improve the government's ability to gather intelligence on the financial system, it does not guarantee that future regulators will be courageous enough to act in the event of a looming market imbalance.

The Pentagon's handling of a $40 billion deal to buy new aerial refueling tankers has provoked a wave of indignation in Europe, where leaders are calling the Obama administration protectionist and accusing the U.S. government of retooling contract terms to favor Boeing over a consortium that included Northrop Grumman and Europe' Airbus.

European finance ministers cancel a vote on new restrictions on hedge funds and private equity firms after objections from Britain, which views the proposed rules as a direct assault on the financial industry in London.

What we're reading elsewhere

Backing away from big banks: State and local governments are looking to send more of their banking business toward smaller financial institutions, the Wall Street Journal reports, as officials lose patience with what they consider stingy lending practices by larger banks.

Study hall on financial overhaul: Buried in the Senate and House versions of financial reform legislation are provisions calling for dozens of studies whose execution could significantly delay many of the measures designed to stave off another crisis, the New York Times reports.

Vexing valuations at Lehman: While many on Wall Street are buzzing about Lehman Brothers' use of aggressive accounting tactics, law and finance professor Frank Partnoy writes on the Naked Capitalism blog about an even more troubling problem -- no one can pin a value on the firm's assets, even 18 months after its collapse.

Speaking of valuations: A former senior trader for Merrill Lynch in London has been punished by British authorities for allegedly mismarking the value of trading positions to conceal losses last year, according to the Wall Street Journal. The case comes as regulators increase scrutiny of how Wall Street values the complex securities at the center of the financial crisis.

So much for pay as we go: At the heart of the federal government's budget crunch lies a vast disconnect between what the American public is willing to pay in taxes and people's desire for costly government services, such as Social Security and Medicare, writes New York Times columnist David Leonhardt.

Man in the news: The Atlantic's April issue features a long profile of Treasury Secretary Timothy F. Geithner, who has played a vital role in the administration's battle to repair the financial system but also has been accused by lawmakers of being too close to Wall Street.

Also caught our eye

Data mining gets personal: All those seemingly innocuous fragments of personal minutiae published on Twitter or Facebook can in fact be collected by computers and used to build a fuller picture of a someone's identity, complete with Social Security numbers and other information normally considered off limits, according to the New York Times.

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