Financial Regulatory Forum

FACTBOX-One year on, US’s Geithner faces big challenges

WASHINGTON, Jan 26 (Reuters) – U.S. Treasury Secretary Timothy Geithner is in the eye of a political storm as he tries to deflect congressional inquiry into his role in bailing out insurer AIG and battle a perception that his influence is diminishing.

The White House on numerous occasions in recent weeks has reiterated its support for Geithner, a former New York Federal Reserve Bank president sworn in as Treasury chief one year ago.

A decision last week by President Barack Obama to start a fight with banks by limiting their size seemed to highlight an expanding policy role for Obama economic adviser and former Fed Chairman Paul Volcker, with Geithner less visible.

Following are five challenges Geithner must grapple with as the administration tries to buttress the economy and tamp down questions about steps taken to counter the financial crisis.

* AIG BAILOUT

The bailout of insurance giant American International Group Inc has dogged Geithner for his entire first year in office, raising questions about decisions he made as head of the New York Fed to pay off the insurer’s bank counterparties in 2008. As Treasury secretary, he failed to halt hundreds of millions of dollars in bonus payments to AIG executives, stoking populist anger and cementing a public perception that he is a creature of Wall Street’s bailout culture — even though he is a lifelong public servant.

India allows euro, yen, sterling forex futures

(Updates with dealer comments, background)

MUMBAI, Jan 19 (Reuters) – India’s central bank on Tuesday allowed the introduction of currency futures in euro, yen and pound sterling, a move dealers said would improve liquidity in the derivatives market.

The approval will expand the currency futures trading from the dollar-rupee contracts that was started in 2008, and will help participants hedge their risks in more currencies.

“This will improve liquidity further and facilitate price discovery better for non-dollar pairs,” said R.K. Gurumurthy, head of treasury at ING Vysya Bank.

INTERVIEW – Obama says will raise currency with China

U.S. President Barack Obama answers questions during an interview with Reuters in the Oval Office at the White House in Washington, November 9, 2009.   REUTERS/Jim Young   (UNITED STATES POLITICS) By Caren Bohan and Alister Bull
WASHINGTON, Nov 9 (Reuters) – U.S. President Barack Obama said on Monday he plans to raise the issue of the yuan currency with Chinese officials when he meets with them in Beijing next week.

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Reuters Summit-Geithner says core U.S. TARP programs ending

US Treasury Secretary Timothy Geithner (R) engages with reporters during the 2009 Reuters Washington Summit in Washington, October 20, 2009.  REUTERS/Jonathan Ernst    (UNITED STATES POLITICS BUSINESS) By Glenn Somerville and David Lawder
WASHINGTON, Oct 20 (Reuters) – The Obama administration will shutter programs at the heart of a $700 billion financial bailout but remains focused on supporting a fledgling economic recovery, Treasury Secretary Timothy Geithner said on Tuesday.

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France, China worry about U.S. dollar weakness

By Gertrude Chavez-Dreyfuss and Emmanuel Jarry
NEW YORK/PARIS, Oct 20 (Reuters) – France said on Tuesday the euro at $1.50 was a disaster for Europe and joined China in worrying that a weak U.S. dollar would stoke inflation.

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U.S. Fed chief Bernanke says ‘exit’ strategy essential for dollar confidence

Chairman of the Federal Reserve Ben Bernanke speaks at the Federal Reserve Conference on Key Developments in Monetary Policy in Washington October 8, 2009. (File Photo) REUTERS/Kevin Lamarque SANTA BARBARA, Calif., Oct 19 (Reuters) – Federal Reserve Chairman Ben Bernanke on Monday said that the performance of the dollar and the U.S. economy will depend on the government’s success in controlling the country’s budget deficit.

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World Bank’s Zoellick says wary of more Fed power, sees more “options” to dollar

World Bank President Robert Zoellick addresses the media during a news conference at the Second Meeting of Finance Ministers of the Americas and the Caribbean at Vina del Mar July 3, 2009. REUTERS/Ivan Alvarado (CHILE BUSINESS) By Alister Bull
WASHINGTON, Sept 28 (Reuters) – The head of the World Bank on Monday sounded a cautionary note about granting greater regulatory power to the U.S. Federal Reserve and said the dollar’s future will “depend heavily on U.S. choices.”

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ANALYST VIEWS: G20 ends reign of G7 in Pittsburgh

U.S. President Barack Obama leaves a news conference at the end of the G20 Summit in Pittsburgh, Pennsylvania September 25, 2009. REUTERS/Jim Young (UNITED STATES POLITICS BUSINESS) PITTSBURGH (Reuters) – Group of 20 leaders on Friday designated themselves as the new forum for steering the world economy, ending the long reign of the G7 as the preeminent committee for guiding global growth:

The G20 leaders said their representatives would report back to them at the next meeting “on how to maximize the effectiveness of our cooperation”, and agreed to have a G20 summit in Canada in June 2010 and in Korea in November.
Meetings thereafter will probably be held annually, and France will be the host in 2011.

Following is a selection of analyst reactions:

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France worried about euro, wants G20 discussion

By Anna Willard
PARIS, Sept 23 (Reuters) – France is concerned about the level of the euro against other currencies and hopes the Pittsburgh G20 will set a timeframe for a future discussion on exchange rates, a French government official said on Wednesday.

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ANALYSIS-Emerging currency revaluation back on global table

By Mike Dolan
LONDON, Aug 5 (Reuters) – Western governments seem set on preventing currency appreciation snuffing out nascent economic recoveries, helping reignite bets on a devaluation of major currencies against those of the emerging economic giants.

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