Linda Ivanov: federal reserve

Tuesday, June 12, 2012

Market news on rollercoaster

The past week has been a rollercoaster ride as a myriad of factors hit the U.S. market. Jubilation over historic lows for 30-year mortgage rates and 10-year treasury bonds was tempered by a dismal employment growth report for May and more bad news from European markets. Nervous investors sent the Dow plunging 275 points for its biggest loss of the year. Fast-forward a few days and the Dow saw a surge to 286 points turning the market positive for 2012.

Two key central-bank related events last week (a European Central Bank officials meeting on Wednesday and the U.S. Federal Reserve Chairman’s Congressional hearing on Thursday) focused on resolving the lingering European debt crisis and revealing any planned easing of U.S. monetary policies. The prospect that both central banks were preparing to do more to resolve problems triggered global rallies.

European officials are mired in the struggle to find ways to ease the region’s debt crisis and considering a plan to lend money from the European bailout fund to rescue banks in Greece and Spain. The Commission's plan proposes to force losses onto bondholders of a bank. Further, ECB officials decided not to lower rates this summer despite increased downside risks.

European Central Bank

The Fed’s chief, Ben Bernanke, was grilled by the Joint Economic committee on the state of the American economy. His highly anticipated testimony was closely watched for any hint of quantitative easing to support growth. Nothing unexpected came out of his testimony. In response, the bond markets that underpin the secondary mortgage market fell into a sideways drift.

Federal Reserve

Both the ECB and Fed pushed back on elected politicians to do more to bolster growth, reduce risks and eliminate uncertainty. With the 2012 political primaries in the U.S. now in the rearview mirror the weak economy will be the driving issue for the duration of the campaign season. Party nominees will be in high gear to offer solutions that will promote growth and gain the voters trust to lead the country into the long awaited recovery.

Sunday, June 10, 2012

Sen. Sanders: Calls for End of Wall Street as an 'insane gambling casino'

Vermont Sen. Bernie Sanders explains the conflicting interests between Wall Street banks and the New York Federal Reserve in charge of keeping them in check, as he and Sen. Barbara Boxer push for legislation barring bankers from sitting on the regional boards at the Federal Reserve. He sounds off on Jamie Dimon, the CEO of JPMorgan, before Dimon’s testimony to the Senate Banking Committee on June 13th.

Video Transcript Excerpts:

Sen. Sanders says, “Wall Street is still acting like an ‘insane gambling casino’ and no lessons were learned from the financial crisis of 2008 by the big banks.

Since Wall Street drove us into the worst financial crisis since the depression, they have learned nothing about what financial institutions in this country should be doing, which is investing in the productive economy. Helping small businesses grow. Creating real jobs. Helping us produce real goods and services.

The fed, among other things, is supposed to regulate financial institutions, have people there to protect the consumers of this country, yet you have the head of one of the largest banks (JP Morgan) as one of the regulators regulating himself. If this is not a conflict of interest, tell me what is? It’s like the fox guarding the hen house.”

Excerpts from Senator Sanders Press Release:

In late-May, Sen. Bernie Sanders introduced legislation to prohibit banking industry

executives from serving as directors of the 12 Federal Reserve regional banks. The recent multi-billion-dollar trading loss at JPMorgan Chase underscored the need to structurally reform the Federal Reserve System to make a more democratic institution responsive to the needs of ordinary Americans, not just Wall Street CEOs.

Sen. Barbara Boxer is an original co-sponsor of the measure to end conflicts of interest involving regulators and the financial institutions they regulate. "Allowing bank presidents to play such an important role at the Fed - the institution that regulates their industry - is a conflict of interest, plain and simple, and it must come to an end. This legislation will help restore the confidence of the American people that the Fed is a truly independent entity," Boxer told a Capitol news conference.

Under current law, two-thirds of the Federal Reserve Bank board members are directly appointed by the financial services industry and one-third of the Fed directors are employed in the financial services industry that the Fed is in charge of regulating.

Under the legislation, no one who works for or invests in a firm eligible to receive direct financial assistance from the Fed would be allowed to sit on the Fed's board of directors or be employed by the Fed.

(source: Full Court Press with Bill Press)

(source: MSNBC Dennis Ratigan Show)

(source: Office of Senator Bernard Sanders)