New York Times — U.S. to Detail Plan to Rein In Finance World
Writers Edmund Andrews and Louise Story got an advance look at the testimony Treasury Secretary Tim Geithner will deliver today on the subject of regulating the financial sector.
The big ticket part of the plan is that brokerages, investment firms and insurers would all be subject to banking-style regulations. Rather than the wild men of Wall Street, the new rules would turn the uber Capitalists into paper shufflers.
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A surprise part of the plan is to force major hedge funds – outfits like the Carlyle Group, Citadel Group and Kohlberg, Kravis & Roberts – to open up their books to Mr. Geithner’s agency, which would, in turn, give Treasury greater access to the companies in which the funds take ownership stakes.
Geither will also ask for the power to regulate the new world of “exotic securities” like the now-infamous credit-default swaps.
“Mr. Geithner is not expected to provide any details on Thursday for how all this will work. But the proposals are all but certain to provoke criticism from all sides — traders who say the rules are too intrusive and policy experts who say the approach is too vague.”
Wall Street Journal – China and the Dollar
After Treasury Secretary Tim Geithner said he was “open” to the idea of a new international reserve currency to replace the dollar and Obama economic advisor Austan Goolsbee wouldn’t rule out such a move, the U.S. currency hit the skids. Now Geithner and the rest of the administration are rushing to talk up the dollar and their deep, abiding affection for it.
The Journal editorial explains why the world – especially China – is getting fed up with the dollar as the international standard for trade and exchange.
“And it means that when the U.S. falls for the temptation to debase its currency, it sends shocks through the entire global trading system. The dollar’s sharp but needless gyrations during this decade are in our view one of the major causes of the housing and commodity asset bubbles that led to the financial panic and global recession.”
Politico — GOP gloves off for budget brawl
Republicans are taking Barack Obama up on his challenge to present an alternate budget and contrast it with the president’s agenda.
Congressional GOP leaders are going to drop the plan today. It includes… lower taxes, cheaper energy and strong defense.
Writers Mike Allen and Victoria McGrane explain that the move comes as Obama continues to deride the Republicans as having no alternatives. The small-government types have said all along they had a plan. And they picked a rising star to do the job.
“So the entire House GOP elected leadership will join Rep. Paul Ryan (R-Wis.), the ranking member of the Budget Committee, for Thursday’s event. “It’s the old ‘I want to see it in writing,’” said a top House Republican official. “They’re going to see it in writing.” “
Wall Street Journal – U.S. Plans New Drone Attacks in Pakistan
The previous administration undertook a policy of making drone attacks across the Pakistan- Afghanistan border on an “as needed” basis. The Pentagon wouldn’t publicly acknowledge the strikes, even as they increased in frequency.
The new administration wants to make more of the attacks over a much broader area but do so in the open and with the blessing of the shaky Pakistani government.
Pakistani President Asif Ali Zardari is in a tough spot – he needs U.S. help, but his citizens hate the drone attacks. Plus his intelligence team is rotten with Taliban/al Qaeda sympathizers/members.
Writers Jay Solomon, Siobhan Gorman and Matthew Rosenberg explain that the drone expansion is just part of the larger effort to use “smart power” in the region.
“The broader reassessment could be announced as soon as Friday, according to people familiar with the matter. The review is believed to address plans for increasing troops and combating drug trafficking in Afghanistan, as well as strategies for strengthening institutions of civil government and building the economies in both countries.”
Chicago Tribune — Rahm Emanuel’s profitable stint at mortgage giant
Writers Bob Secter and Andrew Zajac explain how White House Chief of Staff Rahm Emanuel made more than $320,000 in his 14 months on the board of Freddie Mac for doing little work other than overlooking the company’s Enron-style bookkeeping. Emanuel, who was given the lucrative board slot as a parting gift at the end of the Clinton presidency, was helping steer the company when the phony accounting and political shenanigans that would eventually make “steady Freddie” into a basket case were put into place.
The lender even helped Emanuel get elected to the House in 2002.
“Emanuel joined the House in January 2003 and was named to the Financial Services Committee, where he also sat on the subcommittee that directly oversaw Freddie Mac. A few months later, Freddie Mac Chief Executive Officer Leland Brendsel was forced out, and the committee and subcommittee launched hearings to sort out the mess, spanning more than a year. Emanuel skipped every hearing, congressional records indicate.”
