Ten U.S. banks that have received assistance with rescue money taxpayers have spent over 16 million dollars for lobbying during the first six months of the year. Money is spent to influence the participants in the debate on financial sector reform in the U.S. The regulatory data show that the ten banks that have received the largest share of state aid in 2008 and 2009 spent a lot to influence the views of members of Congress, representatives of the White House, Treasury, Federal Reserve, and some of the federal agencies involved in designing the new regulatory framework. “I’m not surprised that these banks have spent so much money because I saw every day how it happens,” said Ed Mirtsvinski, director of the US Public Interest Research Group. He said reform of the financial sector have worked over 2000 lobbyists. The new regulatory framework, signed by President Barack Obama in July, with volumes in 2300 pages and outlines new rules for derivative trading, charging and regulation of transactions with debit and credit cards. Many of the new rules laid down by banks as too harsh and cause discontent. The sum of 16.32 million dollars set aside for lobbying during the first half, with 26 percent more than the money allocated to this activity for the same period last year.
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The risk of new recessionary bottom increased during last six months, claims the president of the Federal Reserve in Chicago Charles Evans. New recessionary bottom is still the most likely scenario to the U.S. economy, but I am concerned about the strength of the recovery, “he said. High unemployment and a strong housing sector concerned do so fragile recovery, says Evans. It provides that unemployment, now 9.5 percent, remain high in the foreseeable future. Against this background, he said, ultra-expansionary monetary policy the Fed is appropriate. Evans argues that the securitization process by which mortgage loans are converted into packets of bonds sold to investors, reducing the incentive for creditors in the restructuring of troubled home loans. He said efforts to restructure these loans to prevent defaults are “drop in the ocean. Securitization appears a conflict between the interests of creditors and those companies serving the process, he says. The U.S. housing market collapse is already three years as construction is only 25% of their peak levels, and prices fell sharply across the country. Many economists fear that without the driving force behind the housing sector, economic recovery will take longer than usual. Shortly after Evans comments were exported data for sales of existing homes in the U.S. fell more than expected to 27.2 percent on a monthly and 25.5 percent yoy in July, reaching its lowest level since data began to be kept in 1999
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The U.S. indexes started the session in negative territory Tuesday after disappointing results from Dow Chemical and Procter & Gamble and the adverse economic news worsened investor sentiment. Profits to P & G and Dow Chemical was less than analysts’ expectations, leading to a decrease in their papers by 3.4 percent to 59.94 dollars and 10 percent to 25.50 dollars. Basic data from the U.S. also contributed to the deepening decline in the indexes after the planned sales of existing homes in June celebrated the unexpected drop of 2.6 percent in the forecast growth of 0.9 percent. Individual factory orders for the same month fell 1.2 percent, which was worse than the consensus, which showed zero change. The positive pole of the papers ran Pfizer Inc, which rose 5.6 percent to 16.34 dollars after the manufacturer of the drugs produce better than expected profits and make a positive long-term prognosis. This somewhat helped the market recover some of its losses.
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The hope of American taxpayers to obtain restitution of the rescue of Bear Stearns and AIG, which cost the country billions of dollars, be increased yesterday after the Federal Reserve reported capital gains from assets purchased from both companies. Increasing the value of mortgage bonds, which caused the collapse of Bear Stearns and AIG stood on the brink of bankruptcy has led to a capital gain of all three investment schemes, which are concentrated assets of both companies, reports Financial Times. Accounting profit, which the Fed reported in the three schemes, known as Maiden Lane I, II and III, demonstrated an increase in the value of the securities, which were recently described as “toxic”. This can lead to decay of the criticisms of the central bank of the billions that were off to rescue the financial system from collapse. According to official data, lost profits or the difference between the market value of securities and loans granted by the government to purchase, was 10.8 billion dollars on Wednesday, the newspaper added. Two of the investment schemes were designed to remove problem assets from the balance of billions of dollars of AIG. They have been profitable for quite some time, while the third – that in which they were collected at the bad assets of Bear Stearns, just out of a plus.
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The U.S. banks do everything possible to take advantage of low interest rates and rising confidence in myself to the strong performance of the sector this year. This is done through the issuance of significant amounts of new debt, thereby setting the basis for solid gains in the coming years, writes Financial Times. The high interest in fundraising in the U.S. is in sharp contrast with what is happening in Europe, where banks have problems in the issuance of bonds for government debt crisis in the euro area. In recent months, banks such as JPMorgan, US Bancorp, Goldman Sachs and Morgan Stanley easily sell bonds, which indicates a change in market sentiment and increased confidence in the sector. Less than two years after massive U.S. government intervention to rescue the financial system, U.S. banks managed to raise over 7 billion dollars by issuing debt within only one week. According to data from Dealogic, it is the largest amount of new bonds placed for one week since September last year. The US Bancorp has attracted $ 1 billion by selling five-year bonds at 2.45 percent interest. This is one of the lowest interest rates in history paid by Bank in bond, adds Financial Times.
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The unemployment rate in the U.S. is expected to remain well above 7 percent by the end of 2012 and throughout the term of the current U.S. president Barack Obama. It said Federal Reserve Chairman Ben Bernanke before Congress, said New York Times. He will need time to recover all the 8.5 million jobs, removed during the recession in the U.S. in 2008 and 2009. Ben Bernanke is concerned that the economic outlook and financial conditions in the country remain unusually uncertain, and warns that the fiscal crisis in Europe has become an obstacle to economic growth in recent months. Speaking on the occasion of his presentation was a semi-annual monetary policy report to the Federal Reserve to Congress. Analysts say his tone is become much more cautious than the presentation of the last report in February. Bernanke confirmed in his speech that the economic expansion that began in mid 2009, continues but with lower rates. That contributes significant support from governments and central banks with their common fiscal and monetary policy. He expects that the growing demand of households and businesses will help sustain growth, despite incentives from the government will have less effect.
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The first session on Wall Street this week started with a strong growth indexes, but the positive mood could not be kept until the end of the day. Initial support came after a strong rise in European markets, where exchange measurements progressed with more than 2%. On the other hand, market participants were attracted by lower prices of U.S. stocks, resulting from sales in the last two weeks. On the economic calendar ISM index for services for June recorded a decline from 55.4 to 53.8 points, which was below analysts’ expectations for a weak correction to 55.2 points. Enterprise-level Microsoft bulls lead among blue chips, rose 2.35 percent to 23.82 dollars per share. Second Home Depot recorded the largest decline in the Dow Jones Industrial Average, losing 1.7 percent to 27.30 dollars. The energy sector remained the most stable after shares of British Petroleum advanced 8.7 percent to a 31.9 dollars per share. Exxon Mobil rose 1.5 percent to 57.46 dollars, while Chevron advanced by 0.37 percent to 67.56 dollars. Financial sector Bank of America rose 1.6 percent to 14.05 dollars, and JPMorgan added 1.4 percent to 36.33 dollars per share.
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The investors are worried that increased the risk of non-performing the duties of local authorities in the U.S.. Is increasing evidence that some regions are facing the same difficulties to curb the budget deficit and pension system, as some eurozone countries. The yield on certain municipal bonds related to infrastructure projects has increased compared with that of government treasury bonds because of fears that the difficult financial local authorities will have problems paying their debts, says the Financial Times. Data Release of borrowing costs to local governments (in absolute terms) remain relatively low in historical perspective, thanks to high-liberal monetary policy of the Federal Reserve (U.S. central bank). Any variation in the yield of municipal bonds, however, will be closely monitored by investors, since they assume that the fiscal concerns about the eurozone could be conveyed in the USA. “In the second half there is a risk investors to shift its attention from Europe to the U.S.,” said Robert Parker, senior adviser at Credit Suisse Securities. He said parts of California and individual cities in the states Illinois, Michigan and New York are among the most vulnerable. “Inevitably, concerns among investors about these cities will be reflected in widening the spread on yields of municipal bonds,” he says.
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With significant losses U.S. indexes ended the exchange session on Tuesday. Decrease was caused by a data consumer confidence in the country, which showed a greater decline in June compared to expectations of market experts. “Even a technical recession to end last summer, consumers remain concerned about their jobs and future income, refrain from purchases that would contribute to sustainable GDP growth,” Dan told MarketWatch Griyhaus, chief analyst at the investment company Miller Tabak. His words are confirmed by statistics on U.S. consumer confidence this month, which fell after three consecutive increases. According to the confidence index of business organization Conference Board decline quite sharply – up 52.9 points to 62.7 points in May. Expectations of most economists was for a value of 62 points in June. The organization indicated that the main reason for the decline is precisely the uncertainty about the future of the labor market. While no permanent recovery observed in this market can hardly be expected improvement in consumer confidence and consumption, respectively, analysts say. Exchange session ended in New York for Dow Jones Industrial Average with the collapse of 2.64 per cent to 9871 points, S & P 500 fell 3.1 percent to its lowest level this year – 1041 points, and Nasdaq Composite marked loss nearly 3.9 percent to 2135 points.
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The end of the working week has brought the closure of three U.S. banks. Thus the number of bank failures in the country since the beginning of the year amounted to 86 and is on track to improve last year’s record of 140 closed financial institutions – the highest number since 1992. Federal deposit insurance corporation in (FDIC) has closed banks in the states of Florida and New Mexico, Georgia, as buyers are financial institutions by the states. The three failure will cost the FDIC 284,6 million dollars. “The growing problems in commercial property and the ongoing crisis in housing loans will cause many bankruptcies,” said Walter Mix, managing director at financial consulting firm LECG LLC. Over the next three and a half years the bank will claim the bankruptcy 60 billion dollar fund to FDIC, said by the corporation on 22nd June. Fund out of deficit in third quarter of last year. Florida-based Peninsula Bank was purchased by Premier American Bank, owned by Bond Street Holdings LLC. January Holding buy two troubled banks. First National Bank of Jordan was been sold by the FDIC of Savannah Bank, a High Desert State Bank in New Mexico – the First American Bank. In the first quarter of this year the list of troubled banks FDIC counts 775 institutions with assets of 431 billion.
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