Economic Agenda: April 8, 2010

Mike Shepard
Thursday, April 8, 2010; 5:50 AM

Key Events

No set time: Treasury Secretary Timothy F. Geithner visits Beijing for closed-door talks with Chinese Vice Premier Wang Qishan, a top finance official

Congress continues its two-week Easter recess.

At 8:30 a.m. -- The Labor Department issues data on weekly jobless claims.

At 9 a.m. -- The Financial Crisis Inquiry Commission holds a hearing on subprime lending at which former Citigroup executives Chuck Prince and Robert Rubin are scheduled to testify. Also on the witness list are John C. Dugan, current head of the Office of the Comptroller of the Currency, and former OCC chief John D. Hawke Jr.

At 10:30 a.m. -- The nation's biggest retailers report sales results from March.

At 8:30 p.m. -- Federal Reserve Chairman Ben S. Bernanke is scheduled to speak on economic policy lessons during an address at an awards dinner in Washington.

In Today's Washington Post

Federal Reserve Chairman Ben S. Bernanke warns in a speech Wednesday that unless Americans accept higher taxes or cuts to precious entitlement programs, the nation will face soaring budget deficits that could cripple economic growth for many years to come.

The White House hopes that talks on Thursday between Treasury Secretary Timothy F. Geithner and a top Chinese finance official will quell a festering dispute with Beijing over exchange rates and advance a broader conversation about China's role in the global economy.

The World Bank is scheduled to vote Thursday on a controversial $3 billion loan to help a South African utility build a giant coal plant that would bring electricity to millions of poor people. While approval appears likely, the project has drawn opposition from environmentalists, who think the bank should not finance plants that run on fossil fuels linked to climate change.

As lawmakers continue to negotiate over key provisions in legislation that would overhaul the nation's system of financial regulation, the Obama administration vows to fight industry-led efforts to water down the bill.

The Securities and Exchange Commission unveils proposed new rules that would rein in the market for asset-backed securities, a key source of funding for home, auto and credit-card loans that has been widely blamed for worsening the financial crisis.

Seeking to rebut a wave of withering criticism of its business practices, Goldman Sachs declares in its annual letter to shareholders that it did not bet against its clients in the months before the 2008 market meltdown.

During his ten years as chief executive of mining giant Massey Energy, Don Blankenship has built an outsized public image with combative displays of anger and folksy zingers in response to labor struggles and environmentalists' complaints. Now, in the wake of Monday's deadly explosion at a Massey-owned mine, Blankenship is facing the toughest challenge of his career, as regulators and the public scrutinize his company's safety practices.

The IRS plans to require paid tax-return preparers to register with the agency, a move that is long overdue, writes Color of Money columnist Michelle Singletary.

What We're Reading Elsewhere

Back at the negotiating table: United Airlines and US Airways Group are discussing a possible merger that would create the nation's second-largest carrier and could revive efforts to consolidate the industry, which has been squeezed financially for nearly a decade. Read the New York Times account of the negotiations and the implications of a United-US Airways deal. And check out a helpful New York Times graphic charting the wave of mergers unleashed by deregulation in 1978.

Shorting Hollywood? Remember those proposals to create a futures market where investors and film buffs could bet on the prospects of upcoming Hollywood releases? Well, some powerful folks in Tinseltown found that idea less than amusing and have mobilized a small army of lobbyists and lawmakers to get the government to block the new exchange.

Citi crumbled under Fed's watch: Government oversight of Citigroup was inadequate as far back as 2005, according to Federal Reserve documents obtained by the panel that's studying the causes of the financial crisis. The documents suggest that Fed examiners were far too sanguine about Citigroup's weakened financial condition. Read the New York Times account.

Ducking clean-up costs: As part of its reorganization in bankruptcy court, Lyondell Chemical hopes to escape paying a $5 billion tab to clean up nearly a dozen polluted sizes around the country, according to an article in the May issue of Bloomberg Markets magazine. The case highlights a growing challenge for the Environmental Protection Agency, as companies increasingly claim they can avoid costs related to toxic waste cleanup through Chapter 11 proceedings.

Fund manager charged: The Securities and Exchange Commission has accused a onetime star mutual-fund manager at Morgan Keegan of trying to conceal steep losses by overstating the value of the subprime mortgage securities in his funds, according to the Wall Street Journal. The manager's funds were once highly regarded bond investment vehicles until the real estate market slumped.

Insurance gap at mine operator? Massey Energy said in its annual report in March that it did not carry business interruption insurance, an omission that could raise the company's overall liability costs in aftermath of the explosion on Monday, according to Bloomberg News.

Defensive plays against Greek contagion: It's not just those shadowy hedge funds and reckless speculators that have targeted Greece as its public finances falter, the Wall Street Journal reports. Many traditional investors, including well-known corporations and institutions, have also purchased default insurance against Greek debt, and that has intensified the country's troubles in the bond market.

The Fed's dissenter: Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, is no fan of the central bank's near-zero interest rate policy, and he made his displeasure known again in a speech Wednesday picked up by the Business Insider blog, which regards the Fed's easy-money stance is "a free lunch to Wall Street."

Also Caught Our Eye

Time to reset your TiVo? Oprah Winfrey, who redefined the daytime talk-show genre during the quarter century that she hosted her eponymous program, crushed millions of fans in November with her decision to pull the plug on her show. Now, Oprah is set to announce plans to host an hour-long evening program starting late next year on her OWN cable network, which is a joint venture with Silver Spring-based Discovery Communications. Read the Wall Street Journal's interview with Oprah.

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